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RAM Ratings affirms TRIplc Ventures’ AAA(bg)/Stable rating
Published on 07 Aug 2023.
RAM Ratings has affirmed the AAA(bg)/Stable rating of TRIplc Ventures Sdn Bhd’s (TVSB or the Company) MTN Programme of up to RM240 mil in nominal value (2011/2026). The rating reflects an irrevocable and unconditional bank guarantee on the programme from Bank Pembangunan Malaysia Berhad (rated AAA/Stable/P1 by RAM).
TVSB is the concessionaire for the development and maintenance of a Universiti Teknologi MARA (UiTM) campus in Puncak Alam, Selangor (the Project) under a concession agreement (CA). Repayments of the MTN will be met by TVSB’s steady stream of cash inflows in the form of monthly Availability Charges and Maintenance Charges (MCs) under the concession. While the CA allows the government to review the scope and rates of MCs every five years, the charges were not revised after the initial five-year period that ended on 10 April 2019. The parties involved continue to deliberate potential revisions.
The timeliness of concession payments is key as any delay may adversely affect TVSB’s debt servicing ability and liquidity. To date, payments from UiTM have been within RAM’s stressed assumption of three months. The Company’s maintenance track record is commendable, with its key performance indicator (KPI) score for FY Dec 2022 coming in at 99.76% (FY Dec 2021: 99.93%), well above the 93% level required by the CA. Failure to meet KPIs will lead to the imposition of demerit penalties and MC deductions. Net performance-related deductions last year were minimal.
We expect TVSB’s debt servicing ability to remain strong going forward, with projected minimum and average debt service coverage ratios (DSCRs, with cash, calculated over a 12-month period on profit/principal payment months) of 1.50 times and 1.71 times, respectively. Between 2024 – 2026, TVSB is anticipated to channel distributions averaging RM29.6 mil to its sister company Pujian Bayu Sdn Bhd in the form of dividends and Junior Note repayments, to enable the latter to repay its own MTNs (2019/2034). Without these, TVSB’s DSCRs would be higher.
While CA termination risk is considered remote given the non-complex nature of maintenance, TVSB is entitled to compensation if the CA is terminated. As with most concession-related companies, TVSB is exposed to single-project risk, where a force majeure or major operational failure may disrupt its entire operations.
Analytical contacts
Lee Jo Yee
(603) 3385 2583
joyee@ram.com.my
Davinder Kaur Gill
(603) 3385 2525
davinder@ram.com.my
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.
Published by RAM Rating Services Berhad
© Copyright 2023 by RAM Rating Services Berhad
