| 03 Sep 2010 |
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Marc Issues Rating Update On Its A+ID/Developing Rating On Konsortium Lebuhraya Utara-Timur's Rm780 Million Sukuk Istisna
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MARC continues to monitor progress on expressway concessionaire Konsortium Lebuhraya Utara-Timur (KL) Sdn Bhd's (Kesturi) refinancing of its outstanding sukuk. MARC's last rating action on Kesturi's RM780 million Sukuk Istisna was implemented on January 18, 2010 when the rating agency affirmed its A+ID rating on the sukuk and revised Kesturi's rating outlook to developing from stable.
Since MARC's last rating action, Kesturi has made notable progress in addressing its near-term exposure to refinancing risk. There is greater certainty that financial close for the refinancing of the sukuk will occur by mid-October 2010, allowing MARC to conclude that refinancing risk for the sukuk is manageable.
As a result of slower-than-expected traffic ramp-up and growth as well as delay in the commencement of tolling on the Duta-Ulu Kelang Expressway (DUKE), Kesturi's cash position as well as expected cash generation would not be sufficient to cover its upcoming sukuk redemption of RM50 million in October. Kesturi will be issuing new debt that is longer dated to align its annual debt amortisation requirements with its expected cash generation, taking into account its recently revised traffic projections.
MARC expects the sukuk to be redeemed with proceeds from Kesturi's new debt issuance. Upon redemption of the sukuk, the rating agency will withdraw the assigned rating and outlook.
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Contacts:
Sandeep Bhattacharya, 03-2090 2247/ sandeep@marc.com.my;
Khairul Emran Mahmud, 03-20902278/ emran@marc.com.my;
Ezien Hoo, 03-2090 2267/ ezien@marc.com.my.
© Press Release 2010
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