Jul 19 2011 |
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RAM Ratings reaffirms AAA ratings of PLUS's Sukuk Musharakah
RAM Ratings has reaffirmed the AAA ratings of Projek Lebuhraya Utara-Selatan Berhad's (PLUS or the Company) RM3.55 billion Senior Sukuk, RM2.26 billion Sukuk Musharakah Series 1 (Sukuk 1), RM2.41 billion Sukuk Musharakah Series 2 (Sukuk 2) and RM4.50 billion Sukuk Musharakah Medium-Term Notes Programme (Sukuk 3); all the long-term ratings have a stable outlook. The Senior Sukuk, Sukuk 1, Sukuk 2 and Sukuk 3 are collectively known as "the Sukuk Musharakah".PLUS, a wholly owned subsidiary of PLUS Expressways Berhad (PEB), is the toll concessionaire for the North-South Expressway (NSE), the New Klang Valley Expressway, the Federal Highway Route 2 between Subang and Klang, and the Seremban-Port Dickson Highway - collectively known as "the Expressways".
The ratings remain supported by PLUS's strong business profile, underscored by the NSE's strategic alignment as the backbone of connectivity for Peninsular Malaysia. In 2010, traffic flow on the Expressways climbed up 7.7% year-on-year (y-o-y) to 16,228 million passenger-car units km, in tandem with the 7.2% y-o-y expansion of Malaysia's real Gross Domestic Product (GDP); the latter had been driven by the more upbeat manufacturing, construction and services sectors. This trend continued into 1Q 2011, with a 6.0% y-o-y traffic-volume growth (real GDP: +4.6%). For the whole of this year, we expect the Expressways' combined traffic volume to rise 3% y-o-y; the country's real GDP growth is projected to come in at 5.6%.
Looking ahead, PLUS's debt-servicing ability is expected to remain strong throughout the tenures of the Sukuk Musharakah, as reflected by its robust minimum finance service cover ratio (FSCR) of 2.25 times on principal repayment dates. In assessing the Company's ongoing annual distributions to its shareholders, RAM Ratings' sensitised cashflow assumes that PLUS will adhere to its financial covenants throughout the tenures of its debt facilities (i.e. on a forward-looking basis, as opposed to only the year of assessment). Such financial covenants include compliance with the requirements of its finance service reserve account and a post-distribution FSCR of 2.25 times.
On the other hand, RAM Ratings notes that regulatory risk has heightened for the toll-road industry. The Government had earlier announced - via Budget 2011 - that there would be no upward toll-rate revisions for 5 years for domestic highways under PEB - including those of PLUS - effective January 2011. During the toll-freeze period, PLUS's distributions to its shareholder will have to be reduced for the Company to maintain its debt-servicing ability. Also, as with all toll concessionaires, PLUS still faces single-project risk.
-Ends-
Media contact
Jocelyn Chiang
(603) 7628 1124
jocelyn@ram.com.my
© Press Release 2011
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