TRIS Rating Assigns “BBB-” Rating to Senior Unsecured Debt Worth Up to THB4

TRIS Rating affirms the company rating on EDL-Generation Public Company (EDL-Gen) and the ratings on its outstanding senior unsecured debentures at ?BBB-? with a ?negative? outlook. At the same time, TRIS Rating assigns the rating of ?BBB-? to EDL-Gen?s proposed issue of up to THB4 billion and an additional greenshoe portion of up to THB2 billion senior unsecured debentures. The proceeds from the new debentures will be used for refinancing its coming due debentures and for its working capital.

The ?BBB-? ratings reflect our views on EDL-Gen?s status as a core subsidiary of Electricite du Laos (EDL) as well as its status as a state-owned enterprise of the Lao PDR and the critical roles it plays in the Lao PDR?s electricity industry. EDL is a state-owned enterprise, 100% owned by the government of the Lao PDR. EDL?s credit profile is linked to the sovereign rating on the Lao PDR.

EDL-Gen?s stand-alone credit profile (SACP) of ?bbb-? reflects its strong market position in the Lao PDR?s electricity generation industry, acceptable operating performance, and its well-diversified portfolio. However, EDL-Gen?s SACP is constrained by the weakening financial position of EDL who is the sole purchaser of the electricity produced by EDL-Gen?s wholly-owned power plants.

For the first three months of 2021, EDL-Gen recorded revenue from electricity sales of LAK216.1 billion, a decline by 2.8% year-on-year (y-o-y). However, the company?s earnings before interest, taxes, depreciation, and amortization (EBITDA) increased by 78% y-o-y to LAK328.5 billion for the first three months of 2021. The increase in EBITDA was mainly due to the dividend incomes of LAK154.5 billion from Independent Power Plant (IPP) projects during the first three months of 2021, while there was no dividend income during the first three months of 2020.

At the end of March 2021, the company?s adjusted debt was LAK14.8 trillion, with the debt to capitalization ratio of 61.4%. The debt to EBITDA ratio of 11.7 times (annualized with trailing 12 months) for the first three months of 2021 was an improved level from that 2020.

RATING OUTLOOK

The ?negative? outlook reflects the outlook of the sovereign rating on the Lao PDR. TRIS Rating expects that the business model and the level of integration between EDL and EDL-Gen will remain unchanged, and that EDL will continue holding a majority interest in EDL-Gen and receiving full support from the government of the Lao PDR.

RATING SENSITIVITIES

A change in the sovereign rating or outlook on the Lao PDR will impact the ratings or outlook on EDL-Gen. The ratings on EDL-Gen are driven by the credit sovereign rating profile of the Lao PDR.

RELATED CRITERIA

- Group Rating Methodology, 13 January 2021

- Government-Related Entities Rating Methodology, 30 July 2020

- Rating Methodology ? Corporate, 26 July 2019

- Key Financial Ratios and Adjustments, 5 September 2018

EDL-Generation Public Company (EDL-Gen)

Company Rating: BBB-

Issue Ratings:

EDLGEN217A: THB3,810.3 million senior unsecured debentures due 2021 BBB-

EDLGEN21DA: THB2,000 million senior unsecured debentures due 2021 BBB-

EDLGEN227A: THB1,085.5 million senior unsecured debentures due 2022 BBB-

EDLGEN237A: THB4,078.1 million senior unsecured debentures due 2023 BBB-

EDLGEN239A: USD51 million senior unsecured debentures due 2023 BBB-

EDLGEN247A: THB1,660.7 million senior unsecured debentures due 2024 BBB-

EDLGEN24DA: THB3,000 million senior unsecured debentures due 2024 BBB-

EDLGEN257A: THB1,443.1 million senior unsecured debentures due 2025 BBB-

EDLGEN269A: USD166 million senior unsecured debentures due 2026 BBB-

EDLGEN287A: THB1,897.9 million senior unsecured debentures due 2028 BBB-

EDLGEN289A: USD95 million senior unsecured debentures due 2028 BBB-

EDLGEN307A: THB809.8 million senior unsecured debentures due 2030 BBB-

EDLGEN311A: THB1,093.4 million senior unsecured debentures due 2031 BBB-

EDLGEN337A: THB1,621.2 million senior unsecured debentures due 2033 BBB-

Up to THB4,000 million senior unsecured debentures and additional greenshoe portion of up to THB2,000 million due within 5 years BBB-

Rating Outlook: Negative

TRIS Rating Co., Ltd./www.trisrating.com

Contact: santaya@trisrating.com, Tel: 0-2098-3000/Silom Complex Building, 24th Floor, 191 Silom Road, Bangkok 10500, Thailand

? Copyright 2021, TRIS Rating Co., Ltd. All rights reserved. Any unauthorized use, disclosure, copying, republication, further transmission, dissemination, redistribution, or storing for subsequent use for any purpose, in whole or in part, in any form or manner or by any means whatsoever, by any person, of the credit rating reports or information is prohibited, without the prior written permission of TRIS Rating Co., Ltd. The credit rating is not a statement of fact or a recommendation to buy, sell or hold any debt instruments. It is an expression of opinion regarding credit risks for that instrument or particular company. The opinion expressed in the credit rating does not represent investment or other advice and should therefore not be construed as such. Any rating and information contained in any report written or published by TRIS Rating has been prepared without taking into account any recipient?s particular financial needs, circumstances, knowledge and objectives. Therefore, a recipient should assess the appropriateness of such information before making an investment decision based on this information. Information used for the rating has been obtained by TRIS Rating from the company and other sources believed to be reliable. Therefore, TRIS Rating does not guarantee the accuracy, adequacy, or completeness of any such information and will accept no liability for any loss or damage arising from any inaccuracy, inadequacy or incompleteness. Also, TRIS Rating is not responsible for any errors or omissions, the result obtained from, or any actions taken in reliance upon such information. All methodologies used can be found at

http://www.trisrating.com/en/rating_information/rating_criteria.html.

TRIS Rating Assigns “BBB-” Rating to Senior Unsecured Debt Worth Up to THB4 Billion and Additional Greenshoe Portion of Up to THB2 Billion of "EDL-GEN", with “Negative” Outlook