MARC Ratings has affirmed its AAIS rating on Berapit Mobility Sdn Bhd’s (BMSB) RM1.5 billion Sustainability Islamic Medium-Term Notes Programme with a stable outlook.
BMSB is a special-purpose vehicle established by its parent, SMH Rail Sdn Bhd, to undertake sale-and-leaseback transactions with Railway Assets Corporation (RAC). Sukuk proceeds were utilised to partially finance the acquisition of 44 locomotives and 246 wagons from RAC and their subsequent refurbishment or replacement for continued use by RAC.
The rating affirmation reflects the transaction’s stable operating cash flow profile, underpinned by long-term 25-year lease agreements, a ring-fenced financing structure, and the strong creditworthiness of the statutory counterparty, RAC. It also incorporates SMH Rail’s established maintenance, repair, and overhaul capabilities, backed by more than 25 years of industry experience. Key constraints remain contract termination risk, execution risk, and potential delays in lease payments.
The rolling stock delivery schedule has been revised due to supply chain constraints affecting key components, although overall project completion remains targeted for February 2027. The risk is mitigated by upfront procurement and advance payments, with component sets for 30 locomotives secured and the remainder expected to arrive progressively.
The delay is estimated to reduce earnings by approximately RM19.0 million over 2026–2042 relative to the previous base case, with the impact mainly confined to 2026–2027. Earnings are expected to normalise from 2028 upon completion of deliveries and remain broadly aligned with previous projections thereafter.
Under MARC Ratings’ rating case, BMSB’s minimum finance service cover ratio (FSCR) is projected to decline below the 1.50x rating threshold in 2027; however, the 1.25x FSCR covenant is expected to be maintained throughout the sukuk tenure. MARC Ratings estimates that approximately RM5.0 million of shareholder support from SMH Rail would be required to sustain an FSCR of 1.50x in 2027. Under a sensitised scenario assuming an additional one-month delivery delay, the required support increases to approximately RM15.0 million. MARC Ratings considers SMH Rail to have sufficient financial flexibility to provide the required support, based on its liquidity position.