RAM Ratings affirms A2 rating of MEX Capital’s sukuk

Published on 03 Nov 2023.

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RAM Ratings has affirmed 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 premised on Maju Expressway’s (MEX or the Expressway) favourable project economics and robust cashflow profile. MEX Capital is solely reliant on cash flows from its 96.8%-owned Maju Expressway Sdn Bhd (MESB) – the concessionaire for MEX – to service the Sukuk. The Expressway’s strong traffic demand helps support MEX Capital’s debt servicing ability as measured by the finance service coverage ratios (FSCRs, with cash balances), which are expected to stay robust at around 2 times under its existing Concession Agreement (CA) terms.

Nonetheless, the current A2 rating incorporates a downward adjustment to reflect our concerns over past lapses in governance and continued volatility in the spending patterns of the transaction parties. Uncertainty over regulatory reforms for the highway sector, which will have a material impact on the transaction’s cash flow, also presently limits rating upside.

MESB’s dependence on compensation payments (equal to 39% of its revenue for FY 2023) to support its credit profile makes MEX Capital’s Sukuk credit quality more susceptible to any CA reform.  In the event of restructuring involving the extension of MESB’s concession tenure, with no corresponding toll rate increases or compensation, a refinancing exercise for better matching of transaction cash flows will likely be necessary to maintain current cashflow coverage metrics. We will continue to monitor ongoing highway sector developments and reassess the Sukuk’s rating for cash flow, funding profile and credit quality impact as required. In any case, amendments to the CA terms and/or increases in cost allocations beyond permissible levels are still subject to sukukholders’ consent. 

Although MESB’s permissible spending is among the highest in our rated portfolio, the concessionaire intends to submit a request to sukukholders to revise the sum upwards after considering the high traffic demand and the inflation factor. Depending on the quantum of the increase, its financial metrics could be further compromised. In FY Dec 2023, 60% of budgeted spending was channelled towards human resources and administrative matters.


Analytical contacts
Chu Jia Ying
(603) 3385 2519

Davinder Kaur Gill
(603) 3385 2525

Media contact
Sakinah Arifin
(603) 3385 2500


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
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