Jul 30 2013
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RAM Ratings reaffirms AAA rating of CJ Capital's sukuk programme
Cahaya Jauhar is a 60:40 joint venture between UEM Land Berhad and the Johor State Government ("State Government") via State Secretary Johore (Incorporation) ("JSSI"). The Company had been incorporated to undertake the turnkey design-and-build contract for the development of Kota Iskandar in Nusajaya, Johor ("the Project"). Phase 1 and additional works pertaining to furnishings, landscaping and security have already been completed, in return for which Cahaya Jauhar is entitled to receive irrevocable and unconditional annuity payments of RM15 million per annum from JSSI for 10 years ("the Annuity"). The Annuity has been given to CJ Capital via the Deed of Hibah.
The AAA rating is supported by the highly predictable annuity payments from a strong counterparty, i.e. the State Government. The fulfilment of JSSI's obligations is ensured, based on the strength and enforceability of the key governing documents (principally, the Deed of Annuity and the Deed of Hibah). Notably, the annuity payments are payable regardless of the termination or cancellation of agreements relating to the Project, or the variation, delay or cessation of the Project's other phases. To date, all annuity payments from JSSI have been prompt.
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