MARC Ratings has affirmed its A+_IS(s) rating on Projek Lintasan Sungai Besi – Ulu Klang Sdn Bhd’s (PLSUKE) Sukuk Wakalah Programme of up to RM2.0 billion with a stable outlook. Concurrently, the rating agency has affirmed its rating of AAA_IS(bg)/Stable on PLSUKE’s guaranteed facilities of up to RM500.0 million which were previously guaranteed by Danajamin Nasional Berhad. The guaranteed facilities now carry Bank Pembangunan Malaysia Berhad’s (BPMB) counterparty rating following the completion of amalgamation between Danajamin and BPMB. BPMB carries a financial institution rating of AAA/Stable from MARC Ratings.

PLSUKE is wholly-owned by Projek Lintasan Kota Holdings Sdn Bhd (PROLINTAS) which is in turn substantially controlled by Permodalan Nasional Berhad Group. The affirmed rating of A+IS(s) reflects PROLINTAS’ unconditional and irrevocable guarantee on the Sukuk Wakalah programme. MARC Ratings has imputed a two-notch rating uplift from PROLINTAS’ standalone rating based on the rating agency’s view of the continued support extended by parent PNB.

PROLINTAS is a highway developer and operator of six toll road concessions in the Klang Valley, of which four are matured and two just commenced tolling. This includes PLSUKE’s Sungai Besi-Ulu Kelang Elevated Expressway (SUKE) that extends 24.4 km north from Sri Petaling to Ulu Kelang in the Klang Valley. The road is being developed under a 55-year government concession from December 25, 2014, with a conditional extension for another 10 years. Phase 1 of SUKE, a 16.6km segment of the road running from the Cheras-Kajang interchange to Bukit Antarabangsa, has commenced tolling since October 2022. Annual average daily traffic (AADT) reached 56,263 vehicles in 4Q2022, picking up further to 65,580 this year through June 14, 2023. With the recent opening of Phase 2, AADT could see further improvement going forward.

That said, given that the Senior Facilities comprising the Sukuk Wakalah, the bank-guaranteed Sukuk and the Syndicated Islamic Term Facilities (SITF), of up to RM4.7 billion in aggregate, are non-amortising and due in 2027, a refinancing is expected. We continue to view that the refinancing risk will be mitigated by the concessionaire’s linkage to PROLINTAS and PNB. The long remaining life of the concession of at least 42 years from 2027 should also facilitate refinancing.