RAM Ratings reaffirms rating of Anjung Bahasa’s debt issue with stable outlook

Published on 29 July 2011

RAM Ratings has reaffirmed the long-term rating of AA1 for Anjung Bahasa Sdn Bhd’s (Anjung or the Company) RM110 million Junior Notes with a stable outlook.



Anjung is a concession company that has the exclusive right to collect monthly payments as well as maintenance and management (M&M) fees from the Government of Malaysia (GOM), for the construction and operation of Menara Dewan Bahasa dan Pustaka. During the period under review, payments from the GOM had been prompt and in accordance with the Privatisation Agreement (PA). In addition, Anjung had managed and maintained the building without any major problems.

The ratings reflect the assured and stable monthly payments and M&M fees from the GOM, as stipulated under the PA. Other supporting factors include the tight transaction structure and restrictive covenants which mitigate any cashflow leakages; minimal counterparty risk vis-à-vis the GOM; low operations risk given that the scope of work is straightforward and not complex; predictability of cashflow as inflows are dictated by the PA while operating costs are minimal and largely fixed under the M&M agreement; and the assignment of Anjung’s rights under the PA (including revenue rights) to the noteholders. Under our stressed-case scenario, Anjung is envisaged to record annual finance service cover ratio of between 1.21 and 1.49 times over the same period. This is within the minimum requirement of 1.20 times under the Trust Deed.

Nevertheless, the risk of early PA termination due to default on the part of Anjung has not been fully eliminated. Given the Company’s minimal performance obligations under the PA, however, the probability of such an event is deemed low.

Media contact
Yong Keck Phin
(603) 7628 1183
keckphin@ram.com.my