Jul 30 2013
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RAM Ratings reaffirms AA3 rating of Besraya's RM700 million sukuk
RAM's analysis shows that Besraya should generate about RM80 million of annual pre-financing cashflow on average throughout the Sukuk's tenure; this translates into a minimum finance service coverage ratio ("FSCR") of 2.00 times (with cash balances, post-distribution on payment dates) - a level commensurate with the rating. That said, it is crucial that Besraya retains a sufficient cash buffer before making any distributions to its shareholders in the next 1-2 years, in view of uncertainties such as higher-than-expected construction costs, the timing of the BEE's completion and its ability to increase toll rates for the SBH in 2014. Any unfavourable turn in such events may exert pressure on its rating.
The SBH, which straddles densely populated townships and industrial areas such as Salak Selatan, Seri Kembangan and Serdang, provides ready traffic demand. This will be complemented by the BEE, which will improve connectivity between the southern and eastern corridors around Kuala Lumpur. Although the SBH's average daily traffic remained flat and within our expectations at 91,424 vehicles in FY Mar 2013, we opine that the Highways will enjoy more visible long-term growth potential upon the completion of the BEE.
The Highways face competition from the Maju Expressway, the KL-Seremban Highway and alternative toll-free routes - as evinced by the SBH's historical traffic volumes - although fuel prices, travelling time and tariffs greatly determine commuters' preferences. While recent news has surfaced on a potential interchange in Seri Kembangan by an alternative expressway that may divert some traffic from the SBH, this will only be factored into our traffic projections, pending more clarity on the interchange, as well as on the BEE's ADT and toll rates upon its completion.
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Published by RAM Rating Services Berhad
© Copyright 2013 by RAM Rating Services Berhad
© Press Release 2013
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