Fitch Ratings has affirmed Indonesia-based Star Energy Geothermal (Wayang Windu) Limited’s (SEG) Long-Term Issuer Default Rating (IDR) at ‘B+’. The Outlook is Stable. At the same time, the agency has affirmed its USD350m of senior secured notes due in 2020 at ‘B+’ with a Recovery Rating of ‘RR4’. SEG’s ratings reflect the inherent geological risks of its operations and the capital-intensity of its expansions. The ratings also factor good visibility of its earnings, given its track record of reliable operating performance, and its long-term “take or pay” energy sales contract (ESC). KEY RATING DRIVERS High Earnings Visibility: SEG’s energy sales are based on an ESC expiring in 2036 with the state power utility, PT Perusahaan Listrik Negara (Persero) (PLN; BBB-/Stable), which provides for tariff adjustments for movements in exchange rates and inflation. SEG has not faced any serious payment delays from PLN since 2004. Stable Operations: SEG has operated at an average net capacity factor of over 95% – above the industry average – since it started operations in 2000. Its geothermal resources, which were independently verified, are able to support 287MW of power generation (its existing capacity is 227MW) up to 2039. Geological Risks: SEG’s ratings reflect the geological risks present in operating in a seismically active area, especially given its single-site operation. This risk is nevertheless mitigated to some extent by insurance policies covering most plant costs, as well as 24 months of business interruption.
Fitch Affirms Indonesia’s Star Energy Geothermal at ‘B+’/Stable