RAM Ratings lifts Rating Watch, upgrades Besraya’s sukuk rating to AA2 with stable outlook

Published on 30 Jan 2023.

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RAM Ratings has lifted the Rating Watch on Besraya (M) Sdn Bhd’s (Besraya or the Company) RM700 million Sukuk Mudharabah Issuance Facility (2011/2028), concurrently upgrading the sukuk’s rating to AA2 from AA3, with a stable outlook.

Prior to the announcement of a rate reduction for the Sungai Besi Highway and Besraya Eastern Extension (together, referred to as the Highway) in October 2022, Besraya’s sukuk rating was eligible for an upgrade based on RAM’s updated rating criteria for an established highway. It was, however, placed on Rating Watch with a developing outlook on 21 October 2022 as the quantum of the rate cut was unknown and the consequent impact on the transaction’s financial metrics uncertain. A developing outlook is applied in unusual situations where the rating may either be raised, lowered or affirmed. 

The Highway’s toll rates were eventually lowered by around 7.5% on 1 January 2023, with no further receipts of compensation expected beyond March this year. Our assessment does not indicate an adverse impact on Besraya’s debt servicing measures at present. Despite an estimated annual revenue loss of about RM30 mil, the Company is projected to maintain robust cashflows and a strong debt servicing ability, with minimum finance service coverage ratios of at least 2.0 times. The ratio corresponds to an AA2 rating for a highway with established traffic patterns. Correspondingly, reduced earnings during the lowered tolling period may affect shareholder distributions.

A new supplemental concession agreement for the Highway was inked on 30 December 2022. In exchange for the rate cut, Besraya’s concession has been extended, with the next hike scheduled after the sukuk’s maturity. 

Operational since 1999, Besraya is the concessionaire for the Highway. With the nation in an endemic phase since April 2022, the Highway’s average daily traffic has surpassed the pre-pandemic level of 158,000 vehicles, coming in at 164,820 vehicles between April and December 2022. As a prudent measure, our analysis assumes a nominal 1.0% compound annual growth rate over the remaining tenure of the sukuk, even with cheaper tolls.  


Analytical contacts
Wong Ee Loo 
(603) 3385 2521

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.

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Published by RAM Rating Services Berhad
© Copyright 2023 by RAM Rating Services Berhad

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