MARC Ratings has placed its AAIS rating on toll road concessionaire ANIH Berhad’s RM2.5 billion Senior Sukuk Musharakah programme on MARCWatch Negative.
The rating action has been precipitated by issues that were raised during the sukukholders’ meeting held on May 9, 2023, in the wake of the new supplemental concession agreement (SCA) ANIH had entered with the government for its Kuala Lumpur-Karak Highway (KL-Karak) and Phase 1 of East Coast Expressway (ECE1). As MARC Ratings highlighted in its update on the concessionaire on April 28, 2023, the SCA, which extends the current concession period from 2032 to 2069, entails lane widening and flood mitigation works with construction costs estimated at RM2.3 billion. ANIH currently has an outstanding RM1.48 billion sukuk under the programme.
Sukukholders have now requested ANIH to provide a comprehensive financing plan within the next six months by November 2023, that addresses their concerns as a condition to provide a consent to waive a covenant breach which they contend had occurred when ANIH did not obtain their consent prior to signing the SCA. The rating agency also notes the potential change in the shareholding structure that would lead to a single shareholder. The MARCWatch Negative placement factors in the uncertainties that have arisen including the potential for an event of default being called upon and the weakening of the financial service cover ratio (FSCR) that will fall below 1.75x in 2024 following the abolishment of toll compensation under the SCA.
The rating agency will continue to monitor developments in ANIH including assessing the financing plans to take appropriate rating action.