MARC Ratings has affirmed its AAAIS(s) rating on Projek Lebuhraya Usahasama Berhad’s (PLUS) RM25.2 billion Islamic Medium-Term Notes Programme (sukuk programme) with a stable outlook.
The rating incorporates a two-notch uplift from PLUS’ standalone rating, reflecting the government’s irrevocable and unconditional Letter of Undertaking (LoU) to cover any shortfall in the LoU finance service cover ratio (FSCR). As of 10 January 2025, the LoU FSCR stood at 2.39x and is projected to remain comfortably above the covenanted threshold of 2.0x, with a minimum of 2.52x in FY2038 and an average of 3.32x over the sukuk tenure.
PLUS’ close credit link to the government is further evidenced by the interdependence of default events between the sukuk programme and its RM11.0 billion government-guaranteed sukuk, which is repayable only after the full redemption of the former.
PLUS’ standalone rating reflects the maturity of its highway portfolio and its track record of consistent traffic and revenue performance. Traffic volumes have normalised to historical growth patterns, rising 3.5% in 2024 and 2.1% in 7M2025. Potential headwinds from the commencement of Keretapi Tanah Melayu Berhad’s Electric Train Service 3 and the full opening of the West Coast Expressway and the Johor Bahru–Singapore Rapid Transit System in 2027 are expected to be modest, given the limited diversion forecast and the small contribution of cross-border traffic. These factors support strong cash flow visibility and underpin PLUS’ robust debt-servicing capacity.
Liquidity remains strong, with RM4.2 billion in cash and cash equivalents as of end-July 2025, and an average annual cash flow of RM2.7 billion over the past three years. This solid liquidity position is expected to enable PLUS to comfortably meet its projected capex and financial obligations over the next 12 months. In the event of traffic underperformance, PLUS has demonstrated flexibility in deferring or adjusting capex plans to preserve credit metrics. Additionally, there is structural flexibility to extend repayments — currently assumed to be made by 2052 — through to the programme’s final maturity in 2058.
However, highways remain vulnerable to regulatory changes. The planned nationwide rollout of the multi-lane free flow system — expected around 2027 — may require significant, though presently uncertain, capital investment.