RAM Ratings reaffirms AAA(fg) rating of Danajamin-guaranteed sukuk by MRCB subsidiary Puncak Wangi

Published on 03 Sep 2020.

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RAM Ratings has reaffirmed the AAA(fg)/stable rating of Puncak Wangi Sdn Bhd’s (the Company) Guaranteed IMTN Programme of up to RM200 mil (2014/2022). The enhanced rating reflects the irrevocable and unconditional guarantee extended by Danajamin Nasional Berhad (rated AAA/stable/P1 by RAM), which enhances the credit standing of the IMTN beyond Puncak Wangi’s stand-alone credit strength. 

Puncak Wangi, a property investment company wholly owned by Malaysian Resources Corporation Berhad (MRCB or the Group), has signed an Agreement to Build and Lease an office tower (the Office Tower or the Project) to Celcom Axiata Berhad (Celcom). Following the completion of the construction and interior design work for the Office Tower in April 2019, the long-term lease agreement (Lease Agreement) was signed in January 2020. The Office Tower is now fully leased to Celcom; Puncak Wangi is entitled to a stable stream of rental income for at least 15 years.

The Company’s stand-alone credit profile is constrained by its high leverage and weak debt coverage metrics as most of the Office Tower’s development cost is funded by the IMTN and bank loans. Puncak Wangi’s debts amounted to RM442.04 million as at end-May 2020, with a corresponding gearing ratio of 10.79 times (end-December 2018: 10.54 times). Despite the commencement of rental collection, its funds from operation (FFO) debt coverage and interest coverage levels stayed low at a respective 0.13 and 1.31 times in 5M FY Dec 2020. 

Puncak Wangi relies much on the disposal of the Office Tower or refinancing to meet the bullet repayments on its IMTN and term loans. The Company is now seeking bids from interested buyers; the injection of the Office Tower into MRCB-Quill REIT is also an option. The commencement of the long-term lease with Celcom improves the chances of a successful disposal. Until the building is sold, Puncak Wangi will continue to roll over its IMTN, which will become due in November 2020.  

Meanwhile, the Company’s stand-alone credit profile is supported by 15 years of stable rental income from Celcom, following the Project’s completion and the execution of the Lease Agreement. If Celcom were to terminate the Lease Agreement before its expiry, it would still have to settle all its lease obligations through the remaining tenure of the agreement. At the end of 15 years, Celcom may choose to exercise its option to extend the lease for two 3-year terms. Furthermore, the Office Tower is strategically located within the prime commercial hub of Petaling Jaya and enjoys good visibility from Federal Highway Route II – one of the Klang Valley’s main thoroughfares.

Puncak Wangi enjoys solid support from its parent, MRCB, in the form of irrevocable and unconditional guarantees to Danajamin on the repayment of the IMTN and term loans. MRCB Builders Sdn Bhd – a sister company - is the main contractor for the Project.


Analytical contact
Wong Ee Loo
(603) 3385 2521

Media contact
Padthma Subbiah
(603) 3385 2577


The credit rating is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment on the security’s market price or its suitability for a particular investor, nor does it involve any audit by RAM Ratings. The credit rating also does not reflect the legality and enforceability of financial obligations.

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Similarly, the disclaimers above also apply to RAM Ratings’ credit-related analyses and commentaries, where relevant.

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