KUALA LUMPUR (March 20): RAM Rating Services Bhd is maintaining the respective AA3 and A2 ratings of MRCB Southern Link Bhd’s (MRCB SL) RM845 million secured senior Sukuk (2008/2025) and RM199 million junior Sukuk (2008/2027).
It said on Tuesday that however, the ratings of the senior and junior Sukuk continue to be on negative Rating Watch due to the uncertainties of collecting toll at the Eastern Dispersal Link Expressway (EDL).
To recap, on March 9, Prime Minister Datuk Seri Najib Tun Razak announced that motorists who do not use the EDL will not be required to pay toll charges.
However, the ratings agency pointed out the announcement differed from the terms of the concession agreement, under which all motorists (with the exception of motorcycles) that use the Johor Baru-Singapore Causeway must pay the EDL toll charges.
MRCB SL is a unit and funding conduit of MRCB Lingkaran Selatan Sdn Bhd, which holds the concession for the 8.1-km EDL in Johor Bahru.
The proceeds from the Sukuk were used to fund the CONSTRUCTION [] of the EDL, which was fully completed on Jan 15, 2012 and was awaiting the issuance of a certificate of fitness.
Pending finalisation of some technical issues, the Government is expected to make a further announcement by end-March 2012.
“RAM Ratings will closely monitor the relevant developments; any changes in the terms of the concession will be reassessed for credit implications as they are made available,” it said.
The ratings agency, in its comments on the negative Rating Watch, said this reflected uncertainties pertaining to the EDL’s ability to commence tolling operations, its eventual tolling mechanism and traffic volume.
“These factors could have a negative bearing on the Company’s cashflow profile and debt-servicing ability throughout the tenure of the sukuk.
“We highlight that, should MRCB SL be unable to begin tolling operations and not receive timely and adequate cash compensation, it is likely to face a shortfall in its cashflow to meet its debt obligations in December 2012. Under these circumstances, there could be a multi-notch downgrade for the senior and junior Sukuk,” it said.
It said on Tuesday that however, the ratings of the senior and junior Sukuk continue to be on negative Rating Watch due to the uncertainties of collecting toll at the Eastern Dispersal Link Expressway (EDL).
To recap, on March 9, Prime Minister Datuk Seri Najib Tun Razak announced that motorists who do not use the EDL will not be required to pay toll charges.
However, the ratings agency pointed out the announcement differed from the terms of the concession agreement, under which all motorists (with the exception of motorcycles) that use the Johor Baru-Singapore Causeway must pay the EDL toll charges.
MRCB SL is a unit and funding conduit of MRCB Lingkaran Selatan Sdn Bhd, which holds the concession for the 8.1-km EDL in Johor Bahru.
The proceeds from the Sukuk were used to fund the CONSTRUCTION [] of the EDL, which was fully completed on Jan 15, 2012 and was awaiting the issuance of a certificate of fitness.
Pending finalisation of some technical issues, the Government is expected to make a further announcement by end-March 2012.
“RAM Ratings will closely monitor the relevant developments; any changes in the terms of the concession will be reassessed for credit implications as they are made available,” it said.
The ratings agency, in its comments on the negative Rating Watch, said this reflected uncertainties pertaining to the EDL’s ability to commence tolling operations, its eventual tolling mechanism and traffic volume.
“These factors could have a negative bearing on the Company’s cashflow profile and debt-servicing ability throughout the tenure of the sukuk.
“We highlight that, should MRCB SL be unable to begin tolling operations and not receive timely and adequate cash compensation, it is likely to face a shortfall in its cashflow to meet its debt obligations in December 2012. Under these circumstances, there could be a multi-notch downgrade for the senior and junior Sukuk,” it said.
