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RAM Ratings affirms Pujian Bayu
Published on 25 Jun 2024.
RAM Ratings has affirmed the AA3/Stable rating of Pujian Bayu Sdn Bhd’s (Pujian Bayu or the Company) RM200 mil MTN Programme. Pujian Bayu 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.
Concession cashflow, the key source of Pujian Bayu’s MTN repayments, is derived from TVSB flowing monies to Pujian – via its Junior Notes repayments (of which Pujian is the sole noteholder) and dividends after meeting its own financing obligations (including obligations to meet minimum cash reserve requirements) as stipulated in covenants for its own debt facility (rated AAA(bg)/Stable by RAM). As such, Pujian Bayu’s MTN is structurally subordinated to TVSB’s MTN in terms of cashflow priority, security and recovery prospects. The AA3 rating of Pujian Bayu’s MTN considers both its subordination to TVSB’s financing and the Company’s debt coverage levels.
During the review period, Pujian Bayu continued to register healthy liquidity and a strong debt servicing ability, backed by TVSB’s stable and predictable concession cashflow. Payments from UiTM to TVSB have been timely while maintenance key performance indicators held steady, with minimal operations-related deductions.
The Company is projected to register a subordinated debt service coverage ratio of at least 1.35 times (with cash balances, calculated on payment dates) under RAM’s sensitised case, well within 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 holders of Pujian Bayu’s MTN, the transaction is exposed to termination risk, which we deemed as remote. In the unlikely event of a default by TVSB, compensation from the government will only address financing held by TVSB. Holders of Pujian Bayu’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 TVSB’s Junior Notes, which are subordinated to the latter’s MTN.
Analytical contacts
Wong Ee Loo
(603) 3385 2521
eeloo@ram.com.my
Davinder Kaur Gill
(603) 3385 2525
davinder@ram.com.my
Media contact
Sakinah Arifin
(603) 3385 2500
sakinah@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 2024 by RAM Rating Services Berhad
