Posted Date: June 8, 2021
The rating on the Sukuk Wakalah reflects the credit strength of Projek Lintasan Kota Holdings (PROLINTAS) as the provider of an unconditional and irrevocable completion guarantee to PLSUKE to cover potential cost overruns and shortfalls in its finance service reserve account (FSRA) and/or finance payment account (FPA) during the construction period. In addition, PROLINTAS has extended a corporate guarantee on PLSUKE’s principal repayments and profit payments vis-à-vis its Senior Facilities — comprising the Sukuk Wakalah, Danajamin-Guaranteed Sukuk and Syndicated Islamic Term Facilities (SITF) — and Government Support Financing.
PROLINTAS’ long-term rating of A+ benefits from a two-notch rating uplift for support from parent Permodalan Nasional Berhad (PNB) which has demonstrated support in the past including by subscribing to share issuance and cumulative convertible redeemable preference shares (CCRPS) issued by PROLINTAS. PROLINTAS’ standalone credit profile takes into consideration its established track record as a concessionaire, developer and operator of highways. In regard to PLSUKE’s Danajamin-Guaranteed Facilities of up to RM500.0 million, MARC has also affirmed its AAAIS(fg)/Stable rating based on Danajamin Nasional Berhad’s long-term counterparty credit rating of AAA/Stable.
As of May 16, 2021, construction was largely complete with progress reported at 90%. A stop-work order following an incident in Alam Damai on March 22, 2021 has been lifted. Notwithstanding this, MARC’s sensitised scenario which has incorporated a six-month delay in tolling commencement to June 2022 among other factors indicates a finance service cover ratio of above the covenanted 1.5x for 2021-2024. This is primarily due to sizeable pre-funded cash and reserves of RM1.06 billion. The principal repayment is materially constrained by the non-amortising structure of the Senior Facilities, worth up to RM4.7 billion that need to be repaid in 2027, given that PLSUKE will not be able to generate sufficient cash flow during this period to meet the bullet repayment. In this regard, the rating agency believes that PLSUKE’s linkage to PROLINTAS and PNB, as well as the long remaining tenure of the concession (at least 42 years from 2027), would provide room to undertake a refinancing exercise.