MARC Ratings has affirmed its rating on Segi Astana Sdn Bhd’s RM415.0 million ASEAN Green Medium-Term Notes (MTN) facility at A+ and concurrently revised the rating outlook to stable from negative. The current outstanding under the rated facility stands at RM310.0 million. Segi Astana is the concessionaire for the integrated complex, gateway@klia2, at Kuala Lumpur International Airport 2 (klia2) in Sepang, Selangor.
The outlook revision to stable reflects the improvement in Segi Astana’s cash flow generation from a sharp uptick in mall rental receipts and car park fees collection following the easing of travel restrictions in 3Q2021 and the reopening of international borders in 2Q2022. Segi Astana’s stronger liquidity position, which has been aided by proceeds from the issuance of redeemable preference shares (RPS) to its 70%-shareholder WCT Land Sdn Bhd, a wholly-owned subsidiary of WCT Holdings Berhad (WCT), has strengthened its ability to meet its financial obligations.
Meanwhile, the rating affirmation considers the improved prospects for gateway@klia2 in terms of occupancy of its retail mall and car park operations on the back of increasing passenger footfall through klia2. By end-July 2022, klia2 handled 5.3 million passengers compared with 0.5 million a year ago while aircraft movements rose to 96,200 from 32,600 over the same period. Against the backdrop of positive recovery of passenger footfall, the occupancy level of the mall, which has a net lettable area of 379,800 sq ft, is expected to improve to 70% by end-2022 from the current 65.5%.
The affirmation is also underpinned by Segi Astana’s lengthy concession of 36 years that began on August 1, 2011. The long concession period provides headroom for refinancing of the last tranche before the expiry of the programme in January 2028. Nonetheless, in the event the refinancing does not take place, a liquidity support undertaking from WCT (AA-/Stable), will address the final repayment. This undertaking has translated into a single notch uplift on Segi Astana’s rating. MARC Ratings notes the shareholders’ support through the issuance of RPS amounting to RM76 million between 2021 and 2022 to WCT Land, and the deferment of arbitration settlement payment and fixed monthly charges (from October 2020 to August 2022) totalling RM37 million to Malaysia Airports Holdings Berhad (MAHB), has supported Segi Astana’s credit profile. MAHB holds the remaining 30% interest in the company.
The rating agency notes that Segi Astana’s monthly operating cash flows have been positive in 2022; during 7M2022, Segi Astana collected rental income of RM29.6 million while collection from car park operations improved to RM2.5 million per month (RM480,000 per month in 2021). Fees from the car park which has 5,690 parking bays accounted for about half of the mall’s revenue pre-pandemic. As at end-July 2022, Segi Astana has RM46 million in its designated accounts to meet its upcoming repayment of RM30 million in January 2023.