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RAM Ratings affirms rating of West Coast Expressway’s guaranteed sukuk
Published on 26 Sep 2025.
RAM Ratings has affirmed the AAA(bg)/Stable rating of West Coast Expressway Sdn Bhd’s (WCE or the Company) RM1 bil Guaranteed Sukuk Murabahah Programme (2015/2036) (the Sukuk).
The rating reflects irrevocable and unconditional kafalah guarantee extended by Bank Pembangunan Malaysia Berhad (BPMB) (rated AAA/Stable/P1) which enhance the credit strength of the Sukuk beyond WCE’s standalone credit position. WCE is the concessionaire for the 193 km West Coast Expressway (the Expressway) that links Banting, Selangor to Taiping, Perak.
The completion of the Expressway, originally scheduled for 2019, was delayed due to land acquisition setbacks and pandemic-related restrictions. As at end-June 2025, construction was 95% complete, with eight out of 11 sections operational. Full completion is now targeted for end-2026 (previously end-2025), with active ongoing stakeholder negotiations to resolve the land dispute in Section 3. Until the project is fully completed, the remaining RM1.4 bil in construction costs and financing obligations will be met by existing financing proceeds, cash reserves, tolling revenue and a recently secured RM1.15 bil loan from BPMB.
With the eight sections currently operational (including Section 1 completed in July 2024 and Section 2 in February 2025), the Expressway’s average daily traffic (ADT) improved to 187,500 vehicles in 1Q FY2026, up from 138,125 in 1Q FY2025. In the near term, competing toll-free routes and sectional construction delays may continue to inhibit the full utilisation of the Expressway. Assuming a six-month delay in the completion of the remaining sections and a gradual ramp-up in traffic upon full tolling in 2027, we project the Expressway’s annual ADT to average 293,000 vehicles for 2025-2028, with average revenue of RM285 mil per annum, which are 11% and 16% lower than management’s expectations, respectively.
The delay in toll commencement for some sections leaves WCE with less time to ramp up traffic and the resultant tolling revenue to meet principal obligations due beginning February 2028. However, we draw comfort from the long concession term, which provides room for the refinancing or restructuring of WCE’s financial obligations. Furthermore, the Company’s shareholders, WCE Holdings Berhad and Road Builder (M) Holdings Berhad, have demonstrated its financial support thus far with cumulative liquidity support of RM1.97 bil in the past. Under the terms of the transaction, both had irrevocably and unconditionally given financial commitment to ensure the completion of the Expressway, along with up to RM400 mil under a cash deficiency undertaking.
As with most concession-related companies, WCE is vulnerable to regulatory and single-project risks. Transaction credit and cash flows will be reassessed if the Company opts to restructure its concession agreement (CA). We do not preclude a CA renegotiation in tandem with the potential refinancing of WCE’s debts.
Analytical contacts
Lai Jing Wei
(603) 2780 8239
jingwei@ram.com.my
Davinder Kaur Gill
(603) 2780 8220
davinder@ram.com.my
Media contact
Sakinah Arifin
(603) 2708 8212
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
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