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RAM Ratings affirms Pujian Bayu’s AA3 issue rating
Published on 07 Aug 2023.
RAM Ratings has affirmed 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 and a sister company of TRIplc Ventures Sdn Bhd (TVSB). TVSB holds a 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, receiving dividend distributions and repayments on TVSB’s Junior Notes to service its MTN.
The rating considers the level of subordination of the Company’s MTN to TVSB’s MTN based on its financing terms, in addition to its debt coverage levels. TVSB will make payments to Pujian only upon meeting its own financing obligations and the necessary cash-trap requirements stipulated by its covenants. As such, Pujian’s MTN is structurally subordinated to TVSB’s MTN in terms of cashflow priority and security.
TVSB’s stable and predictable concession cash flow further supports Pujian’s issue rating. Payments from UiTM have been timely while maintenance charge deductions are minimal. The rating affirmation is premised on Pujian’s adequate liquidity and healthy projected subordinated debt service coverage ratio (sub-DSCR) of at least 1.33 times (with cash balances, calculated in payment months) under our sensitised case, which is comfortably in line with the requirement of an AA3-rated transaction. The transaction’s cash flow is ring-fenced by a tight financing structure and restrictive covenants applicable to key stakeholders to prevent cash leaks.
As any compensation for concession termination is not linked to the holders of Pujian’s MTN, the transaction is exposed to termination risk. In the unlikely event of a default by TVSB, compensation from the government will only address financing held by TVSB. Holders of Pujian’s MTN may pursue recovery via advances extended to TRIplc Berhad. The Company may also gain access to TVSB’s assets through its holdings of Junior Notes, which rank second in terms of priority to TVSB’s MTN.
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
