RAM Ratings reaffirms Pasdec's AAA(s) debt rating

Published on 25 November 2011
RAM Ratings has reaffirmed the enhanced AAA(s) rating of Pasdec Holdings Berhad’s (“Pasdec” or “the Group”) RM150 million Rainbow Exchangeable Bonds (2006/2013) (“REBs”); the long-term rating has a stable outlook. The enhanced rating is based on the irrevocable and unconditional Put Option Agreement (“Put Option”) granted by the State Government of Pahang (“the State”) to the Security Trustee, for the benefit of the REB holders, with approval from the Federal Government. This Put Option enhances the credit profile of the REBs beyond Pasdec’s inherent or stand-alone credit strength.

The REBs are secured by and exchangeable into a pool of option shares (i.e. IJM Corporation Berhad and YTL Cement Berhad shares). The Put Option requires the State to purchase the option shares from the Security Trustee at the option price during the option period, upon the occurrence of a trigger event or event of default. The option price reflects the aggregate of the nominal amount of the REBs, their redemption premium and coupon payments, and all other outstanding amounts. The option price is not determined by the market price of the respective shares.

Proceeds from the purchase of the option shares will subsequently be used to redeem the REBs. As at end-October 2011, RM133 million of REBs had been exchanged for the option shares and the same amount had been cancelled. The outstanding REBs, including the redemption premium, amounted to RM25 million as at the same date.

Pasdec is the main property-development arm of Perbadanan Kemajuan Negeri Pahang (“PKNP”), which effectively owns 52% of the Group. PKNP is a statutory body established as an economic-development agency under the Pahang State Legislature under Enactment Act 12, 1965. Notably, Pasdec is one of the largest property developers in Pahang, with a 16-year operating track record. Its main objective is to supply affordable housing in the state, although it has also gradually moved into the development of medium-to-high-end residential and commercial properties. Meanwhile, Pasdec’s recent foray into manufacturing operations in South Africa may heighten its business risk given that it is a new venture in an unfamiliar operating environment.

Media contact
Anne Yap
(603) 7628 1038
anne@ram.com.my