RAM Ratings reaffirms A2 rating of MEX Capital’s sukuk on steady post-pandemic traffic and earnings recovery

Published on 05 Jan 2023.

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RAM Ratings has reaffirmed the A2/Stable rating of MEX I Capital Berhad’s (MEX Capital) RM1.13 bil Senior Sukuk Musharakah (2022/2040) (the Sukuk). 

The rating is anchored by Maju Expressway’s (MEX or the Expressway) project economics as well as the restrictions, limitations and covenants under the transaction. MEX Capital is solely reliant on cashflows from its 96.8%-owned Maju Expressway Sdn Bhd (MESB, the concessionaire for MEX) to service the Sukuk. The rating incorporates a downward adjustment to account for the transaction parties’ past lapses in governance. 

The Expressway registered robust traffic recovery following the pandemic. Further aided by the new Bukit Bintang Bypass and ongoing development at the Tun Razak Exchange, MEX’s traffic volume since August 2022 has consistently surpassed 2019 levels. This coupled with the reversal of the decelerating trend in toll collection at the Salak South toll plaza led to an upward revision of our assumption for the Expressway’s traffic. 

Despite our stressed assumptions of a two-year delay in government compensation receipts (in lieu of toll rate hikes as detailed in the concession agreement) and some future traffic divergence from competing infrastructure and higher expenditure, MEX Capital’s projected minimum finance service coverage ratio (FSCR, with cash balances) both with and without toll rate hikes still exceeds 2 times (initial rating: 1.77 times). 

The improvement in the transaction’s FSCR profile is however neutral to the Sukuk’s rating at this juncture because of potential credit implications from weak financial discipline observed in the review period. In 10M 2022, MESB made RM4.23 mil of payments on behalf of its sister company, Maju Healthcare Sdn Bhd. The payments relate to the latter’s undertaking of a retrofitting exercise for a healthcare facility that sits within MEX’s Seri Kembangan rest and service area. With a reimbursement expected by January 2023, MESB does not expect such payments to recur or balloon further. While the unbudgeted payments on behalf of Maju Healthcare are a negative from a governance and financial discipline standpoint, they have not compromised the transaction’s debt coverage indicators. 

Like other toll road concessionaires, MESB is inherently exposed to regulatory and single-project risks. Potential termination or expropriation of its concession is an event risk. Under such circumstances, the concession agreement does not obligate the government to compensate MESB or its lenders.  


Analytical contacts
Chu Jia Ying
(603) 3385 2519

Davinder Kaur Gill
(603) 3385 2525


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.

RAM Ratings receives compensation for its rating services, normally paid by the issuers of such securities or the rated entity, and sometimes third parties participating in marketing the securities, insurers, guarantors, other obligors, underwriters, etc. The receipt of this compensation has no influence on RAM Ratings’ credit opinions or other analytical processes. In all instances, RAM Ratings is committed to preserving the objectivity, integrity and independence of its ratings. Rating fees are communicated to clients prior to the issuance of rating opinions. While RAM Ratings reserves the right to disseminate the ratings, it receives no payment for doing so, except for subscriptions to its publications.

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

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