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

Published on 27 Jul 2021.

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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 an 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 standalone credit strength. 

Puncak Wangi is a property investment company wholly owned by Malaysian Resources Corporation Berhad (MRCB or the Group). Under an Agreement to Build and Lease (ATBL) between Puncak Wangi and Celcom Axiata Berhad (Celcom), the Company agreed to design, construct and lease to Celcom an office building (the Project or Menara Celcom) as the latter’s principal corporate office. Subsequent to the completion of the Project in April 2019, a long-term Lease Agreement was signed in January 2020.

Puncak Wangi’s standalone credit profile is constrained by its high leverage and weak debt coverage metrics as most of the office building’s development cost was funded by the IMTN and bank loans. Based on Menara Celcom’s most recent valuation of RM455 mil, the property loan-to-value ratio stood at a high 88%. As at end-December 2020, the Company’s debt decreased to RM400.26 mil (end-December 2019: RM456.73 mil) following the repayment of some borrowings. This translated into a lower but still elevated gearing ratio of 13.05 times (end-December 2019: 13.46 times). In view of a hefty debt load, Puncak Wangi’s funds from operations debt coverage and interest coverage stayed weak at 0.07 times and 1.33 times, respectively, in FY Dec 2020.

The Company is highly dependent on the disposal of Menara Celcom or refinancing to meet the bullet repayment on the principal of the IMTN and term loans on their maturity dates. The likelihood of successful asset disposal is high, given that the property is under a long-term lease with a strong counterparty, Celcom, with an asset yield of about 7.8% per annum. The timing of the disposal, however, remains uncertain amid a challenging office market. Therefore, we expect IMTN maturing in November 2021 to be repaid either via refinancing under Puncak Wangi or funding from its parent, MRCB. The maturing IMTN can also be rolled over for another year as the tenure of the sukuk programme remains available until November 2022.

Puncak Wangi’s standalone credit profile is supported by stable rental income from Celcom under the Lease Agreement which runs until December 2040. If Celcom terminates the Lease Agreement earlier, it would still have to pay Puncak Wangi all lease obligations for the remaining tenure of the agreement. To date, the Company has received rental payment on a timely basis. Menara Celcom is strategically located within the prime commercial hub of Petaling Jaya (PJ) and is part of the PJ Sentral Garden City development, a large-scale project fully undertaken by MRCB to create a new green central business district in Petaling Jaya.

Puncak Wangi enjoys solid backing from its parent, MRCB, in the form of irrevocable and unconditional guarantees to Danajamin and banks on the repayment of the IMTN and term loans. 


Analytical contacts
Irfan Afifah Mohd Zaki
(603) 3385 2551

Thong Mun Wai
(603) 3385 2522


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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