25 June 2015
Ratings maintained at MARC-1IS/AAAIS

Outlook stable

MARC has kept unchanged its MARC-1IS and AAAIS ratings on Pinnacle Tower Sdn Bhd's RM50 million Islamic Commercial Paper (ICP) and RM400 million Islamic Medium-Term Notes (IMTN) Programmes respectively after concluding its review which was initiated on May 22, 2015. The rating outlook is stable

‎MARC had earlier placed the ratings under review in light of the impending dilution of the State Financial Secretary of Sarawak's (SFS) 70.5% direct equity stake in Pinnacle Tower's parent Sacofa Sdn Bhd (Sacofa) to 20.5%. The proposed change in ownership was expected to trigger a downward adjustment to MARC's assumption of support that Pinnacle Tower can expect to receive from the government through Sacofa.  

Pinnacle Tower's IMTN rating had previously incorporated a two-notch rating uplift for government support based on MARC's classification of Sacofa as a government-related entity (GRE). Following the completion of SFS' selldown of its direct majority stake in Sacofa, both Sacofa and Pinnacle Tower would no longer fall within the scope of MARC's GRE rating methodology. In accordance with the methodology, MARC would have to remove any rating uplift for implied government support ‎previously incorporated in the final IMTN rating. 

MARC's current rating action is prompted by an increase in the credit enhancement for the debt programmes. The debt programmes are now fully cash secured; funds in the Finance Service Reserve Account totalling RM94.9 million are sufficient to fully address payments of principal of RM90.0 million and profit on the debt programmes which mature on March 4, 2016. Additionally, Pinnacle Tower has undertaken not to make any further drawdowns under the programmes.

The issue ratings and stable outlook are now underpinned by the debt programmes' full cash backing. Going forward, Pinnacle Tower's noteholders will be insulated from the risk of downward rating adjustments caused by a change in the creditworthiness of Sacofa and/or removal of the uplift for potential government support. 

Contacts: Nicola Tan, +603-2082 2262/ nicola@marc.com.my; Yap Lai Ken, +603-2082 2247/ laiken@marc.com.my.

© Press Release 2015