MARC Ratings has removed ANIH Berhad’s rating from MARCWatch Negative placement where it has been since May 25, 2023.
The placement was due to the uncertainties stemming from the new supplemental concession agreement (SCA) between ANIH and the government signed on November 17, 2022, including the potential weakening of its financial profile following the abolishment of toll compensation under the SCA and the possibility of an event of default being called upon by sukukholders for not obtaining prior consent to signing the SCA. A waiver of consent regarding the SCA is expected to be granted by sukukholders upon finalisation of a new financing programme that, among others, is contingent upon the government’s approval for a change in ANIH’s shareholding structure.
The removal from MARCWatch Negative reflects MARC Ratings’ assessment of the significant progress made on ANIH’s refinancing plans in the last few months. The change in the shareholding is now nearly complete. The ownership structure is pending final approval from the Prime Minister’s Department which ANIH anticipates receiving by end-February 2024.
Concurrent with the removal of the MARCWatch Negative placement, the rating agency has lowered its rating on ANIH’s outstanding RM1.3 billion Senior Sukuk Musharakah Programme to AA-IS from AAIS where it was prior to the placement. The rating outlook is negative. The lower rating reflects MARC Ratings’ assessment that ANIH’s long-term cash flow under the SCA would be impacted by the absence of toll compensation that could lead to a potentially weaker finance service coverage ratio (FSCR) profile over the longer term. The FSCR for financial year ending March 2024 (FY2024) is now projected to fall between 1.76x and 1.78x, slightly above the covenanted 1.75x. As a comparison, minimum and average FSCR were previously projected at 1.9x and 2.0x which were deemed commensurate with the higher rating band.
ANIH expects to redeem the outstanding sukuk early by end-3Q2024. The realisation of the financing proposal, however, remains subject to regulatory approval on ANIH’s shareholding structure that is reflected in the negative outlook. Once approved and there is clear progress in ANIH’s refinancing plan for the outstanding sukuk, the rating outlook would be revised to stable.
The rating agency will continue to monitor developments and provide relevant updates.