MARC Ratings has affirmed its ratings on Putrajaya Holdings Sdn Bhd’s (PJH) sukuk programmes with a stable outlook. The list of sukuk programmes is appended at the end of this press announcement.
The credit strength of the Malaysian government as the principal lessee of government buildings in Putrajaya under individual long-term lease-and-sublease agreements with PJH remains the key driver for the rating affirmation. The sizeable rental income stream from the government is deemed sufficient to meet the financial obligations under the rated sukuk programmes. PJH’s developmental track record and the credit strength of its shareholders underpin the ratings. Aside from government buildings, PJH has also undertaken residential and commercial property development mainly in Putrajaya to complement the overall development of the federal administrative capital. However, these non-governmental projects remain modest relative to PJH’s core lease receivables activities.
PJH receives lease rental income of RM1.4 billion annually which is more than sufficient to meet principal repayments of around RM500.0 million annually over the next five years. Borrowings declined to RM2.7 billion in 2023 from RM3.4 billion in 2022 on repayments under the various programmes. Consequently, the debt-to-equity ratio improved to 0.26x from 0.34x.
Revenue and earnings from sublease rentals will gradually decline from 2025 onwards when some of the sublease agreements expire. The group’s debt servicing ability will not be impacted as the quantum of reduction is gradual and in line with the reduced financial obligations under the rated programmes. MARC Ratings views PJH’s commercial and residential property projects pose some concerns amid weaker demand in Putrajaya. This is reflected in the marginal decline in revenue by 4.1% y-o-y to RM2.0 billion in 2023, mainly due to lower contribution from the property development segment which decreased to RM234.1 million from RM321.0 million in the previous year. The rating agency understands that the group has deferred most of its project launches for now to focus on clearing its completed inventories which stood at RM212.5 million as at end-December 2023. The list of the rated sukuk programmes is as follows:
- RM1.0 billion 20-year Sukuk Wakalah Programme (due 2041) at AAAIS
- RM370.0 million Sukuk Musharakah Programme (due 2030) at AAAIS
- RM3.0 billion Sukuk Musharakah Programme (due 2032) at AAAIS; and
- RM1.5 billion Sukuk Musharakah Medium-Term Notes (MTN) Programme (due 2033) at AAAIS.