MARC Ratings has affirmed its 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. The rating on PLSUKE’s Danajamin-guaranteed Facilities of up to RM500.0 million has been affirmed at AAAIS(fg)/Stable based on the long-term counterparty credit rating of AAA/stable on Danajamin Nasional Berhad.
PLSUKE is wholly owned by Projek Lintasan Kota Holdings Sdn Bhd (PROLINTAS), an indirect subsidiary of Permodalan Nasional Berhad (PNB). PLSUKE is undertaking the construction of Sungai Besi-Ulu Kelang Elevated Expressway (SUKE), a 24.4km three-lane dual carriageway expressway connecting southern Klang Valley at Sri Petaling and northern Klang Valley at Ulu Kelang.
The A+IS(s) rating on the Sukuk Wakalah reflects the credit strength of PROLINTAS, which has extended an unconditional and irrevocable completion guarantee to cover potential cost overruns and shortfalls in the finance service reserve account and/or finance payment account during the construction period, if any. PROLINTAS’ rating benefits from a two-notch rating uplift based on MARC Ratings’ assessment that PNB would continue to provide support to PROLINTAS. The standalone credit profile of PROLINTAS meanwhile takes into consideration its established track record as a concessionaire, developer and operator of a portfolio of highways.
As of January 25, 2022, construction progress was reported at 94.75% against the updated deadline of August 12, 2022 (from previously November 14, 2021). Assuming tolling commencement in December 2022, the finance service cover ratio (FSCR) is expected to remain above the covenanted 1.5x for 2022–2026, supported by pre-funded cash and reserves. Based on our sensitivity analysis, further 3-month and 6-month tolling delays from December 2022 would cause FSCRs to fall below the covenant in 2026.
Unchanged from our previous assessments, principal repayment will continue to be materially constrained by the bullet-payment structure of the concessionaire’s Senior Facilities comprising the Sukuk Wakalah, Danajamin-Guaranteed Sukuk and the Syndicated Islamic Term Facilities; the Senior Facilities of up to RM4.7 billion in aggregate are non-amortising, with all being due in 2027. In this regard, PLSUKE’s linkages to PROLINTAS and PNB could help address any potential refinancing risk while the long remaining tenure of the concession (at least 42 years from 2027) provides room for a refinancing exercise.