UPDATE 1-Malaysia's RAM says power firm bonds may be hit by tax

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KUALA LUMPUR, Aug 15 (Reuters) - Malaysia's RAM Ratings said on Friday a third of the 30 billion ringgit ($9.01 billion) independent power producer-related bonds it rated are likely to be affected by a new windfall profit tax.

"The good news is that most of the ratings assigned to senior debt instruments by the project companies are not affected by the windfall tax payments," Wong Fook Wah, chief executive of RAM Ratings, told reporters.

"The bad news is that for the few affected issues, losses are expected to be sharply felt across the market; few bond issuers will be spared."

The rating agency said nine of its 25 rated independent power producer-related bonds are likely to be affected by the windfall tax.

In June, Malaysia's government announced that a windfall profit levy of 30 percent would be charged on return on assets for producers of electricity with return on assets in excess of 9 percent for each financial year. The tax has hit the price of bonds issued by independent power producers.

Most independent power producers (IPPs) such as YTL Power (YTLP.KL), Sime Darby (SIME.KL), Tanjong Plc (TJPL.KL) and MRCB (MYRS.KL) have strongly objected to the plan.

Last month, the government sweetened the deal, saying it will allow exemption from the tax for power producers which agree to alter electricity sales terms with power utility Tenaga Nasional (TENA.KL).

"Although possible, we do not anticipate the IPPs to accede to terms which will result in a larger quantum of cash outflow as compared to the anticipated windfall tax payable up to the final maturity of the debt instruments," Wong said. ($1=3.329 Ringgit) (Reporting by Faisal Aziz; Editing by Kim Coghill)