Published on 30 Jun 2022.
RAM Ratings has reaffirmed the AA3/Stable rating of Pujian Bayu Sdn Bhd’s (Pujian or the Company) RM200 mil MTN Programme. Pujian is a wholly owned funding vehicle of TRIplc Berhad (TRIplc) and a sister company of TRIplc Ventures Sdn Bhd (TVSB). TVSB holds a 23-year concession for the development and maintenance of a campus for Universiti Teknologi MARA (UiTM) in Puncak Alam, Selangor (the Project). The concession is the key source of Pujian’s MTN repayments. The Company is entirely dependent on TVSB’s residual cashflow, in the form of dividend distributions and repayments on TVSB’s Junior Notes, to service its MTN. Pujian is the sole holder of TVSB’s Junior Notes.
The reaffirmed rating is premised on Pujian’s adequate liquidity and healthy projected subordinated debt service coverage ratio (sub-DSCR) of at least 1.32 times (with cash balances, calculated in payment months) under our sensitised case. This is commensurate with the sub-DSCR requirement of an AA3-rated non-complex public-private partnership/project finance initiative (PPP/PFI) project. TVSB’s stable and predictable concession cashflow further supports the rating. Payments from UiTM have been timely while maintenance charge deductions have been minimal.
In our stressed analysis, we assume that TVSB will optimise distributions to the extent permitted under its Senior MTN. We have not accorded any benefit to potential support from TRIplc in the sensitised case as its financial capacity is limited. Pujian’s strong cash reserves may temporarily cushion liquidity pressure in the absence of distributions from TVSB. That said, we expect the Company to face greater liquidity pressure from 2030 onwards, given its projected inability to fund the Debt Service Reserve Account with the principal amount six months before repayment dates. However, a breach in this regard is unlikely as the transaction provides for a remedy period during which the principal amount can be fully built up one month before the due dates.
The transaction’s cashflow has been ring-fenced by a tight financing structure and restrictive covenants applicable to key stakeholders to prevent cash leaks. Pujian is prohibited from making any distribution to its shareholder or taking on any other debt. There are also controls over maintenance and administrative costs payable by TVSB to related companies.
The transaction is exposed to the risk of termination of concession as the Government of Malaysia – the ultimate paymaster under the concession agreement – has no direct obligation to the holders of Pujian’s MTN. In the unlikely event of a default by TVSB, compensation from the government will only address financing taken up to fund the construction of the Project, i.e., the Senior MTN. Holders of Pujian’s MTN may still recover advances extended to TRIplc. The Company may also gain access to TVSB’s assets through its holdings of Junior Notes, which rank second in terms of priority.
Lee Jo Yee
(603) 3385 2583
Davinder Kaur Gill
(603) 3385 2525
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