Published on 12 Oct 2022.
RAM Ratings has assigned a final rating of AAA/Stable to Amanat Lebuhraya Rakyat Berhad’s (ALR or the Issuer) Senior Sukuk Programme of up to RM5.5 bil (2022/2044) (the Sukuk). In doing so, we have reviewed all relevant transaction documents and find them to be in line with our expectations when the preliminary rating was assigned (published on 20 May 2022). Our cashflow analysis also considers the delay in financial close (about four months), the final tranching and yields, the latest traffic volumes and cost trends.
The final rating reflects ALR’s superior ability to meet profit and principal obligations, based on the assessment of the Issuer and the Concession Companies1 as a single economic unit and an analysis of their consolidated finance service coverage ratios (FSCRs). Our latest sensitised projections accord some benefit to cost savings in the first two years of the transaction due to the demonstrated track record of prudent spending by the Concession Companies. Accordingly, the four highways’ cashflow and cash accretion are anticipated to support ALR’s steady debt servicing ability, translating into respective minimum and average FSCRs of 2.25 times and 5.21 times (with cash balances) throughout the tenure of the Sukuk (base case: 2.25 times and 8.27 times). These levels are supportive of the coverage ratios required for an AAA-rated transaction. The cashflow analysis and numbers for the final rating are based on assumed issuance in early October 2022, although actual issuance is on 13 October 2022.
The traffic volume on the four highways was relatively stable before the COVID-19 pandemic but was affected by ensuing movement restrictions. Traffic recovery since then looks promising – for 8M 2022, the aggregate traffic volume came up to about 90% of the pre-pandemic level, approaching 96% of the 2019 level in August. Looking ahead, we expect LDP to account for 48% of the transaction’s revenue during the Sukuk’s tenure, while KESAS, SPRINT and SMART will constitute a respective 22%, 26% and 4%.
Chart 1: Resilient operating performance anchors rating
Source: Gamuda Berhad and RAM
ALR was set up on 13 December 2021 after the Cabinet gave the greenlight for the restructuring of the four highways. ALR’s shareholders, as a group of experienced and distinguished corporate individuals, have the task of ensuring the Issuer achieves its mandate which includes the provision of affordable tolling and eliminating the burden on the government of paying compensation for non-revision of toll rates. While ALR was incorporated under the Companies Act, its shareholders are not profit motivated. The Issuer’s charter incorporates comprehensive governance best practices.
The Sukuk will be issued to mainly acquire the entire equity interest in the Concession Companies, to refinance all their outstanding debts and set aside opening cash reserves as liquidity support for the transaction.
1 Lingkaran Trans Kota Sdn Bhd, Kesas Sdn Bhd, Sistem Penyuraian Trafik KL Barat Holdings Sdn Bhd and Syarikat Mengurus Air Banjir & Terowong Sdn Bhd. These companies are the concessionaires for four highways – the Damansara-Puchong Expressway (LDP), Shah Alam Expressway (KESAS), SPRINT Expressway (SPRINT) and the SMART Tunnel.
Davinder Kaur Gill
(603) 3385 2525
Karin Koh, CFA
(603) 3385 2508
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Ratings on Amanat Lebuhraya Rakyat Berhad