MARC Ratings has upgraded its rating on Grand Sepadu (NK) Sdn Bhd’s RM210.0 million Sukuk Murabahah to AAIS from AA-IS. Concurrently, the rating outlook has been revised to stable from positive.
The upgrade reflects Grand Sepadu’s strengthened financial profile, driven by ongoing debt reduction, consistent traffic demand and cash flow generation, and a demonstrated track record of disciplined dividend management, which the rating agency expects to continue. As of end-2024, Grand Sepadu’s debt-to-equity ratio improved to 0.3x (2023: 0.5x), while its cash flow coverage on interest strengthened to 21.8x (2023: 11.9x). Overall debt continued to decline, reaching RM45 million as of end-April 2025.
Grand Sepadu operates the 17.5-km, mature New North Klang Straits Bypass (NNKSB) under a concession agreement that expires in December 2032. Average daily traffic rose 1.5% y-o-y to 89,484 vehicles in 2024 and remained steady at 89,403 vehicles during the first two months of 2025. Correspondingly, tolling revenue increased to RM55.1 million in 2024, up from RM52.2 million in 2023. The Kapar toll plaza — handling the highest volume of Class 3 vehicles and applying the highest toll rates — remains the largest revenue contributor for NNKSB.
Grand Sepadu expects to generate annual operating cash flow of RM60 million to RM70 million over the next three years, supporting liquidity and debt repayment. In MARC Ratings’ downside scenarios — assuming slower traffic growth and delayed toll compensation (in lieu of toll hikes) — the finance service coverage ratio from 2025 to 2027 remains well above the 1.75x covenant, averaging 5.3x with a minimum of 3.8x. Grand Sepadu maintains flexibility in shareholder distributions and is expected to uphold a prudent dividend policy to preserve liquidity and financial strength.