Monday, October 31, 2011

ECB head says Chinese help for eurozone is 'normal'

The outgoing ECB president, Jean-Claude Trichet, has said that it is "absolutely normal" for the European rescue fund to try to find more money
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Global Economy

The president of the European Central Bank has denied that eurozone countries are going "cap in hand" to China.

On the eve of his departure from the ECB's top job, Jean-Claude Trichet said the move was "absolutely normal".

The head of the European Financial Stability Facility (EFSF) has been meeting Chinese officials in an effort to boost the bailout fund.

Mr Trichet hands over the reins of the ECB to the Italian central banker, Mario Draghi, on Tuesday.


Friday, October 28, 2011

Nicolas Sarkozy: Greece should have been denied euro

French President Nicolas Sarkozy has said allowing Greece into the eurozone in 2001 was a "mistake".

He said Greece was "not ready" at the time. But, he added, it could be rescued thanks to Wednesday's EU deal on the euro debt crisis.

In response, Greece's foreign minister told the BBC that Athens was not the source of the crisis, and that no country should be made a scapegoat.

The agreement reached in Brussels has triggered a worldwide shares rally.



Oct 4, 2011 -
MARC has taken the following actions on issue ratings of Scomi Group Berhad (Scomi) and funding vehicle KMCOB Capital Berhad (KMCOB) after removing the same from MARCWatch Negative:
1) Lowered its issue rating on Scomi's RM500 million Medium Term Notes (MTN) Programme to A+ from AA-; and
2) Lowered its issue rating on KMCOB's RM630 million Murabahah Medium Term Notes to A+ID(cg) from AA-ID(cg).

Scomi is the ultimate parent of KMCOB which is held through 76%-owned operating subsidiary Scomi Oilfield Limited (SOL). KMCOB's obligations under the rated notes are guaranteed by SOL.

The outlook on both ratings is negative. The downgrades affect RM200 million of outstanding MTNs issued by Scomi and RM480 million of outstanding Murabahah notes issued by KMCOB.

The one-notch downgrades balance low operating cash flow at Scomi and SOL relative to maturing debt obligations and tight liquidity at both entities against the recent improvement in the group's core business operations. KMCOB's noteholders recently consented to a further deferment of outstanding payments into its Finance Service Reserve Account (FSRA) to December 14, 2011.
Scomi, meanwhile, intends to unlock liquidity through asset disposals and/or corporate exercise(s) to reduce its debt leverage. MARC opines that there is a possibility that Scomi may also seek a waiver or deferment of its forthcoming sinking fund requirements in view of the short remaining time frame to build up the sinking fund by March 2012 to redeem the RM200 million outstanding notes due in September 2012.

In MARC's view, the current liquidity metrics of SOL (in the case of KMCOB) and Scomi reveal a degree of vulnerability to execution risk and less favourable than expected operating performance that are better indicated by the revised ratings and negative outlook. Although MARC believes that there is a possibility that the group can improve its operating cash flows in the second half of 2011 on the back of improved market conditions, the rating agency believes that noteholders of KMCOB and Scomi face increased risk of a non-coercive debt rescheduling in coming months.
Oilfield services provider SOL turned around with a pre-tax profit of USD12.5 million for the six months ended June 30, 2011 (1HFY2011) after two consecutive years of losses. Its order book also shows healthy replenishment with the uptick in drilling activity, particularly in Malaysia. At group level, Scomi posted an unaudited pre-tax profit of RM47.7 million for 1HFY2011 compared to a full year pre-tax loss of RM186.6 million for FY2010.

MARC will likely lower the ratings further if SOL and Scomi are unable to secure additional liquidity resources through asset disposals or other external sources and/or internally generated cash flow comfortably ahead of payment dates for forthcoming rated debt obligations. The downgrades would not necessarily be limited to one notch, particularly for Scomi, whose debt obligations are structurally subordinated to that of its operating subsidiaries, including SOL's. The rating agency will likely view any further solicitations of covenant and sinking fund build-up payment waivers by KMCOB and/or Scomi negatively. Conversely, the outlook can be changed to stable if SOL and Scomi are able to secure additional liquidity resources to pay down debt in accordance with existing debt maturity schedules.

Gary Lim Chun Pin, +603-2082 2243 /;
Francis Xaviour Joe, +603-2082 2279 /

Thursday, October 27, 2011

RAM Ratings reaffirms AA1 rating of Ranhill Powertron's Islamic MTN programme

Published on 04 October 2011
RAM Ratings has reaffirmed the AA1 rating of Ranhill Powertron Sdn Bhd’s (“Ranhill Powertron” or “the Company”) RM540 million Islamic Medium-Term Notes Programme, with a stable outlook. Ranhill Powertron is an independent power producer (“IPP”) that operates a 190-MW combined-cycle, gas-turbine power plant in Kota Kinabalu, Sabah, under a 21-year power purchase agreement (“PPA”) with Sabah Electricity Sdn Bhd (“SESB”).

Ranhill Powertron has managed to preserve its commendable operating track record, healthy financial profile and strong debt-servicing ability on the back of stringent financial covenants. The Company has been claiming full capacity payments from SESB since the commissioning of the original open-cycle, gas-turbine phase in 1998, by having consistently met the requirements under the PPA. It also earned a modest fuel margin in the 12-month period between July 2010 and July 2011, despite having registered higher-than-allowed heat-rate levels for 3 months.

Going forward, Ranhill Powertron is envisaged to generate respective minimum and average finance service coverage ratios (“FSCRs”) (with cash balances, post-distribution) of 1.79 times and 1.94 times on principal repayment dates. In assessing the Company’s ongoing annual distributions to its shareholders, our assumptions are in line with the management’s assertion that Ranhill Powertron will adhere to its financial covenants throughout the debt programme’s tenure (i.e. on a forward-looking basis, as opposed to only the year of assessment). Meanwhile, similar to other IPPs, Ranhill Powertron is also exposed to regulatory and single-project risks.

Media contact
Lawrence Leong
(603) 7628 1187

European Union reaches key agreement on Greek debt

The European Union has reached a "three-pronged" agreement it says is vital to resolving the Greek debt crisis.

As part of the deal, banks have agreed to take a 50% loss on Greek debt.

That has removed a major obstacle in European efforts to stabilise the problem.

The announcement helped lift the euro as investors were more optimistic about the outlook for the region's growth and single currency.

"The result will relieve the whole world that was expecting a decision that was strong from the eurozone," French President Nicolas Sarkozy said at a press conference in Brussels.

SEE BBC: European Union reaches key agreement on Greek debt


Oct 3, 2011 -
MARC has lowered its rating on Dawama Sdn Bhd's (Dawama) RM120.0 million Sukuk Musyarakah Medium Term Notes Programme (Senior Sukuk) to 'D' from 'CIS' to reflect the missed principal repayment of RM20.0 million on September 27, 2011. MARC understands from the trustee that no payment was made on the date. The RM20.0 million principal repayment had been rescheduled from April 27, 2011 after Senior Sukukholders consented to a deferment of the same.

MARC had earlier downgraded the RM20.0 million Junior Sukuk to ‘D’ on April 29, 2011 following a missed profit payment due on April 27,2011. Following its current rating action, MARC will accordingly cease to provide analytical coverage on Dawama.

Darrell Lim, +603-2082 2261/;
Rajan Paramesran, +603-2082 2233/

Monday, October 24, 2011

RAM Ratings assigns AA2 and AA3 ratings to RHB Bank's Proposed RM3 billion multi-currency debt programme

Published on 03 October 2011
RAM Ratings has reaffirmed RHB Bank Berhad’s (RHB Bank or the Bank) respective long- and short-term financial institution ratings at AA2 and P1; the Bank’s issue ratings (refer to Table 1) have also been reaffirmed. At the same time, RAM Ratings has assigned respective AA2 and AA3 ratings to the Bank’s Proposed Senior Notes and Proposed Subordinated Notes under its Proposed RM3 billion Multi-Currency Medium-Term Note (Proposed MCMTN) Programme. The proceeds from the Proposed MCMTN Programme have been earmarked for general working capital, other corporate purposes and any repayment of borrowings. The Proposed Subordinated Notes qualify as the Bank’s Tier-2 capital under Bank Negara Malaysia’s capital-adequacy regulations. All the long-term ratings have a stable outlook.

The 1-notch rating differential between RHB Bank’s AA2 long-term financial institution rating and the AA3 ratings of its Subordinated Notes reflects the subordination of the debt facilities to its senior unsecured obligations. The 2-notch rating differential between RHB Bank’s AA2 long-term financial institution rating and the A1 rating of its Hybrid Tier-1 Securities indicates the deeply subordinated nature and embedded interest-deferral feature of the hybrid instruments.

RHB Bank is the core entity within the RHB Capital Berhad universal-banking group (RHB Capital or the Group). The financial institution ratings reflect RHB Bank’s established market position in Malaysia, along with its healthy profitability and adequate capitalisation levels.

In fiscal 2010, RHB Bank had achieved record results against the backdrop of a conducive domestic economy and synergistic benefits derived from other entities within the Group. The upward trend continued in 1H FY Dec 2011 with an 11% y-o-y pre-tax profit growth to RM1.0 billion (1H FY Dec 2010: RM928.1 million). The Bank’s gross impaired-loan ratio had also improved further to 3.9% at end-June 2011 (end-December 2010: 4.4%) supported by lower net impaired loans formation as well as an enlarged loan base. Its net loans-to-deposits ratio remained sound at 88.3% at end-June 2011 (end-December 2010: 88.2%). At the same time, capitalisation levels remained adequate, with its Tier-1 and overall risk-weighted capital-adequacy ratios (RWCARs) coming in at 10.3% and 14.0%, respectively (end-December 2010: 10.0% and 13.9%).

In respect of RHB Bank’s proposed acquisition of an 80%-stake in an Indonesian Bank, PT Bank Mestika Dharma, we understand that its acquisition plan is currently under review due to the uncertainty arising from potential regulatory change on the single shareholding limit in Indonesian banks.

RAM Ratings notes that the Group had experienced changes in its key management line-up during the year, as well as changes in the composition of its significant shareholders. We do not expect them to materially affect RHB Bank’s direction and focus; however, we will maintain close monitoring of any potential impact on the momentum of strategy implementation within the Group.

Media contact
Gladys Chua
(603) 7628 1049

MAA Holdings redeems RM140 million bank-guaranteed MTN; outlook on CP/MTN Programme revised from negative to stable

Published on 30 September 2011
RAM Ratings has received confirmation from the facility agent that MAA Holdings Berhad (MAA Holdings) has fully redeemed the outstanding RM140 million of medium-term notes (MTN) under its first RM200 million bank-guaranteed MTN issue (2007/2012) (the First Issue); this had been facilitated by the proceeds from the disposal of Malaysian Assurance Alliance Berhad and 4 other subsidiaries (the Identified Subsidiaries). We note that the early redemption had taken place before the scheduled maturity date of 6 January 2012. As such, RAM Ratings has withdrawn the AAA(bg) rating of the First Issue and no longer has any rating obligation on the debt facility.

Meanwhile, RAM Ratings has reaffirmed the respective long- and short-term ratings of MAA Holdings’ RM200 million Commercial Papers/Medium-Term Notes Programme (2007/2014), at B1 and NP. The outlook on the long-term rating has been revised from negative to stable following the completion of the sale of the Identified Subsidiaries.

Media contact
Shireen Ng
(603) 7628 1021

Thursday, October 20, 2011


Sep 30, 2011 -
MARC has withdrawn its AAIS rating on DRIR Management Sdn Bhd’s (DRIRM) Senior Class A Sukuk Ijarah Medium Term Notes (Sukuk) following the full redemption of the remaining outstanding RM40 million principal amount of Sukuk on June 28, 2011. MARC’s AA-IS rating on DRIRM’s RM160 million Class B Sukuk remains on MARCWatch Developing pending the completion of the proposed refinancing of the Sukuk.

MARC will closely monitor the progress of the refinancing exercise, which is now at an advanced stage and is expected to be completed within the next three months, to resolve the MARCWatch placement.

Sandeep Bhattacharya, +603-2082 2247/

Tuesday, October 18, 2011

RAM Ratings reaffirms Toyota Capital Malaysia's debt ratings, maintains negative outlook

Published on 30 September 2011
RAM Ratings has reaffirmed the AAA(s)/P1(s) ratings of Toyota Capital Malaysia Sdn Bhd’s (“Toyota Capital” or “the Company”) RM1 billion Islamic Commercial Papers/Medium-Term Notes (“CP/MTN”) Programme (2008/2015). At the same time, the AAA(s) ratings of Toyota Capital’s RM1.2 billion MTN Programme (2008/2018) and the P1(s) rating of the Company’s RM600 million CP Programme (2004/2011) have been reaffirmed. All the long-term ratings have a negative outlook.

The enhanced ratings of Toyota Capital’s MTN and CP Programmes reflect the credit strength of the irrevocable and unconditional guarantee extended by Toyota Motor Finance (Netherlands) BV (“Toyota Netherlands”), a fully owned subsidiary of Toyota Financial Services Corporation (“Toyota Financial Services”). RAM Ratings notes that Toyota Netherlands has a credit-support agreement with Toyota Financial Services; in turn, Toyota Financial Services has a similar contract with Toyota Motor Corporation of Japan (“Toyota Motor” or “the Group”). Hence, the ultimate support from Toyota Motor enhances the credit profiles of these conventional debt facilities beyond Toyota Capital’s stand-alone credit strength.
Similarly, the ratings of the Islamic CP/MTN Programme are underpinned by a Purchase Undertaking from Toyota Capital, which is in turn backed by the irrevocable and unconditional guarantee extended by Toyota Netherlands, with the ultimate credit support stemming from Toyota Motor.

Toyota Motor’s strong business profile is underscored by its position as one of the world’s largest vehicle manufacturers. The negative outlook reflects the Group’s still-vulnerable earnings prospects, which could be weakened further if recovery efforts were to slow down on the recent earthquake- and tsunami-driven devastation in Japan. The strong yen also exerts significant pressure on Toyota Motor’s earnings given its sizeable output from Japan. Furthermore, persistently high unemployment rates and still-uncertain economic outlook for key markets may affect the Group’s sales. On the other hand, these factors are moderated by the Group’s strong balance sheet. Should Toyota Motor be able to exhibit sustainable improvements in its earnings in the next few quarters, underpinned by its sturdy global positioning, the outlook on Toyota Capital’s long-term ratings could be reverted to stable. Otherwise, there may be downward pressure on the ratings of the debt instruments.

Toyota Capital, meanwhile, is a financier for primarily Toyota vehicles in Malaysia, and is ultimately owned by Toyota Motor; its goal is to complement and support the sale of Toyota vehicles in this country. The Company enjoys strong support and financial flexibility from its ultimate shareholder, Toyota Motor. Notably, Toyota Capital’s asset quality has remained sturdy, with a gross impaired-loan ratio of 0.6% as at end-March 2011. In FY Mar 2011, the Company achieved a record operating profit of RM38.1 million (FY Mar 2010: RM17.0 million), thanks to its more favourable financing business.

Media contact
Gladys Chua
(603) 7628 1049

Monday, October 17, 2011

RAM Ratings reaffirms AA2/P1 ratings of Litrak's Islamic securities

Published on 30 September 2011
RAM Ratings has reaffirmed the AA2 ratings of Lingkaran Trans Kota Sdn Bhd’s (“Litrak” or “the Company”) Sukuk Musharakah Islamic Medium-Term Notes I Programme (“IMTN I”) of up to RM1.15 billion (2008/2023) and Sukuk Musharakah Islamic Medium-Term Notes II Programme (“IMTN II”) of up to RM300 million (2008/2023); both the long-term ratings have a stable outlook. At the same time, RAM Ratings has also reaffirmed the P1 rating of Litrak’s Islamic Commercial Papers Programme (“ICP”) of up to RM100 million. The IMTN I, IMTN II and ICP will collectively be referred to as “the Islamic Securities”.

Litrak, a single-purpose company, is the toll concessionaire for the 40-km intra-urban Lebuhraya Damansara-Puchong (“LDP”). The Company’s strong business profile is predominantly backed by the LDP’s strategic alignment, which straddles the densely populated areas of Puchong, Sunway, Petaling Jaya, Damansara and Kepong. In FYE 31 March 2011 (“FY Mar 2011”), the Highway’s average daily traffic (“ADT”) increased 1.78% year-on-year (“y-o-y”) to 445,710 vehicles (FY Mar 2010: 437,921 vehicles). Meanwhile, Litrak’s healthy return on capital employed of around 14% for the last 5 financial years highlights its strong business profile.

Based on RAM Ratings’ sensitised cashflow, Litrak’s average pre-financing cashflow is projected to come up to around RM200 million per annum, translating into minimum and average finance service coverage ratios (with cash balances, post-distribution) - calculated at financial year-end - of a respective 2.75 times and 3.48 times. In addition, Litrak’s sensitised minimum and average FSCRs (with cash balances, post-distribution) on principal payment dates are projected to come up to 2 times and 2.94 times, respectively. In assessing Litrak’s annual distributions, RAM Ratings’ sensitised cashflow projections assume that the Company will adhere to its financial covenants throughout the tenures of the Islamic Securities (i.e. on a forward-looking basis, as opposed to only the year of assessment).

In the meantime, the rating remains moderated by regulatory risk that is inherent for all toll-road projects, as well as single-project risk. On this note, the Government has allocated some RM2.8 billion to extend the existing Light Rail Transport (“LRT”) lines under the 10th Malaysia Plan. In addition, 2 new highways that run parallel to some stretches of the LDP have been proposed, i.e. the Kinrara-Damansara Highway and the Kinrara-Serdang-Putrajaya Highway. While we note that the proposed LRT line extensions and new highways are likely to affect the LDP’s traffic demand over the longer term, the extent of the impact is more difficult to predict at this juncture, as commuters’ preference for modes of transportation and highways will depend on factors such as fuel prices, travel time, destination, convenience and cost.

Media contact
Yean Ni Ven
(603) 7628 1172

Friday, October 14, 2011

S&P downgrades Spain on weak growth outlook

Standard & Poor's (S&P) has cut Spain's long-term credit rating by one notch, from AA to AA-, because of weak growth and high levels of private sector debt.

The ratings agency added that the country's high unemployment would remain a drag on the economy.

Last week, the Fitch agency also cut Spain's rating, a process that can raise a country's borrowing costs.



Sep 23, 2011 -
MARC has completed its review of ABS Samudera Receivables Berhad's (ASRB) rating on its Series A notes issued under its RM250.0 Medium Term Notes Programme and downgraded the rating to AA+ from AAA. The outlook is negative. The rating review had focused on a reassessment of credit protection for the RM5.0 million of outstanding notes, taking into account unexpected tax liabilities arising at the special purpose vehicle (SPV) level, including potential tax penalties. Also, key transaction performance data only recently became available for ASRB's collateral pool of consumer finance receivables as with the computation of tax liabilities. Additionally, MARC notes that the tax returns have yet to be filed for 2009 and 2010. The negative outlook on the rating considers the uncertainty surrounding ASRB's ultimate tax liability and corresponding cash flow implications.

The lowered rating reflects reduced credit support for Series A notes based on MARC's cash flow simulation analyses incorporating cash outflows for ASRB's estimated tax liabilities of RM1.95 million for 2007, 2008 and 2010 and potential tax penalties. (ASRB incurred a loss in 2009.) MARC's revised cash flow runs confirm that the transaction can no longer support updated AAA stress scenarios for default and prepayment of underlying receivables as a result of the unexpected tax liabilities. The revised rating of AA+ on the Series A notes, meanwhile, is supported by cash balances held in ASRB's designated accounts, and the adequate credit quality and performance of consumer finance receivables in the current collateral pool.

ASRB is a bankruptcy remote special purpose vehicle incorporated for the sole purpose of issuing up to RM250 million in MTNs to finance the purchase of eligible consumer financing receivables from Koperasi Shamelin Berhad (KSB). Notes Series-A is secured by a receivables pool (Portfolio-A) of consumer loans to public sector employees originated by Koperasi Shamelin Berhad (KSB). Portfolio-A is serviced via monthly salary deductions at source and administered by Angkatan Koperasi Kebangsaan Malaysia Berhad (Angkasa). At closing, the outstanding value of Portfolio-A was RM25.0 million (Portfolio-A) versus RM25.0 million of MTNs under Notes Series-A. KSB is established under the Co-operative Societies Act 1993, and its main source of revenue is derived from consumer financing offered to eligible members comprising mainly civil servants. The quality of KSB’s loan portfolio has been relatively stable in the past, based on low levels of default observed.

Since transaction close, Portfolio-A has seen a vast amount of prepayments as a result of refinancing by borrowers. As of May 31, 2011, the pool’s cumulative prepayment rate was observed to be 49.24%, falling slightly below MARC’s assumed prepayment rate of 50%. The effects of prepayments are moderated, to some extent, by prepayment penalties imposed via the Rule of 78s method. MARC expects that prepayments rates to remain high as the collateral pool’s outstanding balance has been reduced significantly and comprises seasoned loans.

Meanwhile, credit performance of the collateral pool has remained under AAA-stress limits, reflected by a cumulative default rate of 2.43%, falling well below MARC’s projected default rate of 12.45% for the corresponding period. MARC believes that the collateral pool’s credit performance will continue to remain satisfactory going forward.

Credit enhancement under Notes Series-A is provided by the sizable excess spread and a liquidity reserve. As of June 30, 2011, the amounts contained in the designated accounts, including the liquidity reserve, stood at RM7.09 million. This amount represents a credit enhancement factor before taxes of 1.41 times.
MARC’s negative outlook reflects uncertainty with respect to the actual extent of the potential tax penalties and how it will affect credit support for the notes. Accordingly, the negative outlook reflects the possibility of further downgrading should ASRB’s tax burden prove to be significant enough to affect full repayment of the notes.

Ruben Khoo, +603-2082 2265/;
Sandeep Bhattacharya, +603-2082 2247/

Thursday, October 13, 2011

RAM Ratings assigns A1 rating to AmIslamic's proposed RM2 billion subordinated sukuk

Published on 23 September 2011
RAM Ratings has assigned an A1 rating to AmIslamic Bank Berhad’s (AmIslamic or the Bank) proposed RM2 billion Subordinated Sukuk Musyarakah Programme (Proposed Securities); the long-term rating has a stable outlook. Meanwhile, AmIslamic’s long- and short-term financial institution ratings have been reaffirmed at AA3 and P1, respectively. Concurrently, the ratings of the Bank’s RM3 billion Senior Sukuk Musyarakah Programme (2010/2040) and RM400 million Subordinated Sukuk Musyarakah Programme (2006/2016) have also been reaffirmed at a respective AA3 and A1. The 1-notch differential between the AA3 financial institution rating of AmIslamic and the A1 rating of the Proposed Securities denotes the subordinated nature of the latter. All the long-term ratings have a stable outlook.

AmIslamic’s financial institution ratings mirror the AA3/Stable/P1 ratings of its sister bank, AmBank (M) Berhad (AmBank). AmIslamic leverages on the back-room operations and risk-management systems of AmBank, on top of relying on the latter’s branches and network. Given that AmIslamic is viewed as a key component of the larger AMMB Holdings Berhad (AHB) universal-banking group, liquidity and financial support is expected to be readily extended if required.

Additionally, the ratings are underpinned by AmIslamic’s relatively sound asset-quality indicators. The Bank’s gross impaired-financing ratio stood at 1.8% as at end-June 2011 (end-March 2010: 1.5%), compared to the industry average of 2.9%. At the same time, AmIslamic’s tier-1 and overall risk-weighted capital-adequacy ratios declined to a respective 8.0% and 12.5% (end-March 2010:10.5% and 15.3%), due to a spike in risk-weighted assets. This had been brought by a change in the Bank’s financing mix (i.e. a larger portion of financing for business enterprises, which attract higher credit risk charges), financing growth, as well as the reinstatement of capital charge on undrawn credit facilities. We expect the Bank’s overall RWCAR to improve after the drawdown of the Proposed Securities, which qualify as tier-2 capital.

Media contact
Amy Lo
(603) 7628 1078

Tuesday, October 11, 2011

RAM Ratings reaffirms AA1(s) rating of Pendidikan Industri YS's BaIDS

Published on 23 September 2011
©RAM Ratings has reaffirmed the enhanced AA1(s) rating of Pendidikan Industri YS Sdn Bhd’s (“PIYSB” or “the Group”) RM150 million Bai’ Bithaman Ajil Islamic Debt Securities (2008/2022) (“BaIDS”), with a stable outlook. PIYSB provides educational services via Universiti Selangor (“Unisel” or “the University”) and Inpens International College – both institutions of higher learning established under the Private Higher Educational Institutions Act, 1996.

The rating is premised on RAM Ratings’ opinion that PIYSB’s debt-servicing ability with respect to the BaIDS has been substantially enhanced by the credit profile of the Selangor State Government (“SSG” or “the State Government”, the shareholder of PIYSB), via the latter’s strongly worded Letter of Support (“LoS”). This document states that the State Government will ensure – either through equity, loans, grants and/or other means – that PIYSB will be able to fully and promptly meet its financial obligations on the BaIDS throughout the tenure of the debt issue. Nonetheless, the LoS is perceived as being short of an outright guarantee.
Apart from the LoS, the SSG has also provided a letter to PIYSB acknowledging its responsibility with regard to the BaIDS. RAM Ratings’ interaction with SSG officials (including the State Financial Officer and the State Treasurer) lends further support to our view that the State Government is very likely to provide financial assistance to PIYSB should the need arise. “The SSG recently gave its assurance to PIYSB that RM205.495 million will be made available for the repayment of the BaIDS from 2012 to 2022. The amount covers all principal and profit payments due from January 2012 until January 2022,” notes Kevin Lim, RAM Ratings’ Head of Consumer and Industrial Ratings.

The enhanced rating also takes into consideration the strategic nature of PIYSB’s main assets (i.e. Unisel and Inpens) to the SSG, previous instances of the State Government’s support for the Group, the SSG’s full ownership of PIYSB, and the State Government’s presence on PIYSB’s board of directors. On the whole, the explicit support from the SSG enhances the credit profile of the BaIDS beyond PIYSB’s inherent or stand-alone credit strength, which is viewed to be weaker.
The University’s student numbers had been declining in the past few years amid an increasingly competitive industry landscape; the University has also had significant management turnover. Meanwhile, losses had wiped out the Group’s equity, rendering it technically insolvent; although adjusting for capital grants, its gearing ratio would have been at 0.42 times as at end-Dec 2010.

Media contact
Low Li May
(603) 7628 1175

Monday, October 10, 2011

Triplc to raise RM240m from bond sale

Triplc Bhd, a Malaysian developer and maker of timber products, plans to raise RM240 million through a bond sale backed by state guarantee agency Danajamin Nasional Bhd, Malaysian Rating Corp said in a report today.

The issuance is rated AAA with a “stable” outlook given the government guarantee, Marc said. -- Bloomberg

Read more: Triplc to raise RM240m from bond sale

Eurozone crisis: Merkel and Sarkozy 'agree key changes'

The German and French leaders will propose "important changes" to the way the eurozone operates after talks on controlling the bloc's debt crisis.

Chancellor Angela Merkel and President Nicolas Sarkozy said the aim was closer and more binding economic and financial cooperation between eurozone countries.

The leaders said they would give further details by the end of October.

The nations were "determined to do the necessary to ensure... recapitalisation of Europe's banks", Mrs Merkel added.

Germany and France have differed over how to recapitalise Europe's banks, said by some to require between 100bn (£86bn; $134bn) and 200bn euros to withstand the sovereign debt crisis.



Sep 22, 2011 -
MARC has affirmed the ratings of MARC-1(fg)/AAA(fg) on Syarikat Kapasi Sdn Bhd’s (Kapasi) RM200 million Commercial Papers/Medium Term Notes (CP/MTN) Programme with a stable outlook. The ratings are premised on the financial guarantee insurance policy provided by Danajamin Nasional Berhad (Danajamin) for the CP/MTN Programme. MARC’s current rating of AAA/stable on Danajamin is based on its important role as Malaysia’s sole financial guarantee insurer, its status as a government-sponsored entity, its solid capital base and ample liquidity. The ratings affect RM30 million and RM70 million of MTNs issued under the programme, maturing in June 2013 and June 2014 respectively.

Kapasi, a wholly-owned subsidiary of Asian Pac Holdings Bhd, is developing the second phase of Kota Kinabalu Times Square (KKTS), which consists of a retail mall, five condominium blocks, exterior shops and carpark lots with a combined gross development value (GDV) of RM1.35 billion. Since the ratings were last assigned, the developer has made changes to its plans for the condominium component of KKTS. The change in plans has pushed the completion date back by six months, delaying revenue and cash generation from the project. MARC believes that further delays in the project could lead to an increased reliance on refinancing for the repayment of outstanding notes, given the programme’s relatively short five-year tenure.

Kapasi’s amended building plans add an additional 133 units to the 498 units of condominiums planned. KKTS’s estimated gross development value (GDV) has increased by RM125 million as a result of the change in building plans and higher revised average prices per square foot for its condominium units. As of June 30, 2011, the company has achieved a 50% take-up rate in two of the five condominium blocks. An anchor tenant has been secured to occupy 130,000 sq ft of the retail mall’s 669,252 sq ft. In terms of construction completion risk, Kapasi’s track record of having successfully completed the first phase of KKTS and Karamunsing Capital in Kota Kinabalu provides some degree of assurance regarding Kapasi’s ability to manage risks associated with the development of the second phase of KKTS.

With the completion of both projects and the delay in the launch in the second phase of KKTS, earnings have been on a declining trend. For financial year ending March 2011 (FY2011), Kapasi registered revenue of RM1.74 million (FY2010: RM12.68 million) and a pre-tax loss of RM2.57 million (FY2010: RM1.01 million). Revenue was derived mainly from car park rental income. MARC expects condominium unit sales as well as the 41 exterior shop lots of its retail phase development to drive FY2012’s earnings. Kapasi’s debt-to-equity improved to 0.18 times in FY2011 (FY2010: 0.28 times) following a repayment of a RM47 million fixed-term loan that was taken to partly finance the basement work of the KKTS (phase 2) project.

Noteholders under the CP/MTN programme are insulated from downside risks in relation Kapasi’s credit profile by the guarantee provided by Danajamin. Any changes in the supported ratings or rating outlook will be primarily driven by changes in Danajamin’s credit strength.

Nisha Fernandez, +603-2082 2269/;
Rajan Paramesran, +603-2082 2233/

Friday, October 7, 2011

RAM Ratings downgrades ratings of Idaman Capital's Super Senior Bonds, maintains negative Rating Watch; Senior, Mezzanine and Subordinated Bonds put on Negative Rating Watch

Published on 21 September 2011
RAM Ratings has downgraded the ratings of Idaman Capital Berhad’s (Idaman Capital or the Issuer) RM50 million Class A and RM430 million Class B Super Senior Fixed-Rate Bonds (collectively referred to as “the Super Senior Bonds”), from A1 to BB1. The negative Rating Watch on the Super Senior Bonds has also been maintained. Concurrently, the C3 ratings of the RM220 million Senior Fixed-Rate Bonds (Senior Bonds), RM20 million Mezzanine Fixed-Rate Bonds (Mezzanine Bonds) and RM80 million Subordinated Bonds (Sub Notes) - while reaffirmed - have been put on Rating Watch, with a negative outlook. The Super Senior, Senior, Mezzanine and Subordinated Bonds are collectively referred to as “the Bonds”.

Idaman Capital is a trust-owned, bankruptcy-remote, special-purpose vehicle (SPV), incorporated to undertake this primary collateralised-loan-obligation (CLO) transaction. The Bonds’ proceeds had been used to purchase an RM800 million loan portfolio (the Portfolio) from Alliance Investment Bank Berhad; the interest and principal payments from the Portfolio will be utilised to meet the SPV’s operating expenses as well as the coupon and principal obligations on the Bonds.

The downgrading of the Super Senior Bonds’ ratings had been prompted by the heightened default risk of the transaction, as a result of reduced credit support and available cash buffer to meet the senior costs as well as the Bond coupon payments and principal due on the Super Senior Bonds due on 10 October 2011. Having been informed of the likely deferment of one of the obligors’ principal repayment, RAM Ratings highlights that a default by any remaining obligors beyond that will result in a default on the Super Senior Bonds.

Based on the latest updates made available to RAM Ratings and our review of the Portfolio, out of the 10 surviving obligors with a total outstanding principal of RM202.12 million, one obligor is very likely to miss its RM22.5 million final loan repayment falling due in October 2011. The repayment of this obligor’s loan obligations depends on the entrance of a new shareholder and this party’s assumption of the obligor’s commitments under the CLO loan. While initially expected to have been completed before October 2011, the takeover is now only likely to materialise by the end of this year. Although the obligor has conveyed that it has obtained a refinancing offer from a bank, we remain concerned about the tight timeline.

In view of the above, RAM Ratings’ cashflow analysis excludes the repayment from this particular obligor; our assessment of the Portfolio will only consider the other 9 surviving obligors. Excluding this obligor, the RM306 million of outstanding Super Senior Bonds will be supported by RM180 million of outstanding loans and RM147 million of cash balances in the designated accounts as at 8 September 2011. Based on this available collateral against the SPV’s expenses as well as Bond coupons and principal payments due, the overcollateralisation level for the Super Senior Bonds amounts to approximately RM10 million. This buffer is viewed to be relatively thin against an average loan size of about RM20 million for the surviving obligors.

The negative Rating Watch on the Super Senior Bonds has therefore been maintained, premised on the increased risk of a default on the Super Senior Bonds due to the thin buffer available under the transaction. As 5 of the surviving obligors are currently on a negative rating outlook (with 3 classified as being credit-impaired), the transaction remains highly vulnerable to further missed payments by any of the obligors.

Meanwhile, RAM Ratings has also put the Senior, Mezzanine and Subordinated Bonds on negative Rating Watch - to reflect the imminent default on the respective debt tranches given the insufficient cashflow from the surviving Portfolio and existing cash balances to meet the principal due on these debt tranches on 10 October 2011. Recovery prospects are perceived to be slim because the ongoing debt- and/or corporate-restructuring exercises of the defaulted obligors are likely to be protracted. On a more optimistic note, however, the Issuer could recoup RM22.5 million from the completion of the previously mentioned obligor’s takeover, albeit after the due date (in October 2011) of the Bonds’ obligations.

All said, RAM Ratings is closely monitoring the transaction and will take the appropriate rating actions - if any - as and when we receive the relevant material information.

RAM Ratings' Rating Watch highlights a possible change in an issuer's existing debt rating. It focuses on identifiable events such as mergers, acquisitions, regulatory changes and operational developments that place a rated debt under special surveillance by RAM Ratings. In a broader sense, it covers any event that may result in changes in the risk factors relating to the repayment of principal and interest.

Issues will appear on RAM Ratings' Rating Watch when some of the above events are expected to or have occurred. Appearance on RAM Ratings' Rating Watch, however, does not inevitably mean that the existing rating will be changed. It only means that a rating is under evaluation by RAM Ratings and a final affirmation is expected to be announced. A "positive" outlook indicates that a rating may be raised while a "negative" outlook indicates that a rating may be lowered. A “developing” outlook refers to those unusual situations in which future events are so unclear that the rating may potentially be raised or lowered.

Media contact
Lim Chern Yit
(603) 7628 1035

RAM Ratings reaffirms AAA rating of AmMortgage's First Note Series, backed by Telekom's staff housing loans

Published on 21 September 2011
RAM Ratings has reaffirmed the AAA rating of the RM339.38 million Medium-Term Notes (First Note Series) issued by AmMortgage One Berhad (AmMortgage or Issuer), with a stable outlook. The First Note Series represents the first issuance from AmMortgage’s RM250 million Commercial Papers and RM1 billion Medium-Term Notes Programme. This transaction involves the securitisation of staff housing loans originated by Telekom Malaysia Berhad (TM or the Originator).

The rating reflects the available over-collateralisation (OC) of 10.65%, based on RM242.99 million of outstanding principal receivables and RM5.25 million of permitted investments and cash balances as at 30 June 2011. The OC provides protection against losses arising from defaults under a AAA-stress scenario, delinquencies, prepayments and negative yield spreads in the transaction. The rating is also supported by the lower default risk of the staff housing loan compared to commercial loans, given that the repayments are directly deducted at source. As at 30 June 2011, the underlying loan portfolio recorded cumulative net defaults of 0.26%, well below our base-case assumption of 0.71%. Prepayment of the loan portfolio has minimal impact on the transaction as prepaid loans can be passed through to amortise the bonds, thereby mitigating any negative carry for the transaction. Within the first 2 years of the transaction, 30.4% (RM115.03 million) of the First Notes Series had been redeemed ahead of its maturity date on 29 September 2034.
The AAA rating also factored in credit enhancement provided by the Originator. The transaction features an undertaking by TM to make monthly subsidy payments to the Issuer based on a fixed rate. In addition, TM has also set aside a fund which is used to compensate the Issuer if any of the underlying loans that exceed 70% loan-to-value (LTV) threshold turn delinquent. Furthermore, TM is obligated to assume the monthly repayments of any loan that is in arrears and falls within a pre-determined eligibility.

As part of the credit enhancement for the transaction depends on TM fulfilling its undertakings, the rating of the First Note Series is strongly linked to TM’s credit profile. Nonetheless, we derive comfort from TM’s superior credit profile, underpinned by its sturdy financial standing and strategic role as the national telecommunications company. RAM Ratings has also reviewed the servicing abilities of the Portfolio Servicer, AmBank (M) Berhad, including its administration of the entire TM Employee Mortgage Scheme for and on behalf of TM. We view AmBank’s resources, processes and capabilities to be commendable; AmBank has adequately performed its servicer responsibilities, as required under the transaction.

Media contact
Tan Han Nee
603 7628 1023

Thursday, October 6, 2011

RAM Ratings reaffirms AAA rating of Ara Bintang's First Senior MTNs

Published on 13 September 2011
RAM Ratings has reaffirmed the AAA rating of Ara Bintang Berhad’s (Ara Bintang) RM330 million First Senior Medium-Term Notes (First Senior MTNs); the long-term rating has a stable outlook. Ara Bintang is a special-purpose vehicle incorporated for the securitisation exercise involving 2 retail malls, namely Starhill Gallery (Starhill) and Lot 10 Shopping Centre (Lot 10) - collectively known as the Properties - with a market value of RM1.042 billion as at 31 December 2010.

The reaffirmation is premised on the credit support provided by the loan-to-value (LTV) ratio of 44.3% and debt service coverage ratio (DSCR) of 2.00 times, based on
RAM Ratings’ adjusted valuation of RM745.41 million in aggregate for Starhill and Lot 10. The LTV ratio and DSCR remain commensurate with our AAA rating. The rating is further underscored by the Properties’ above-average quality, backed by their strategic location in the heart of Kuala Lumpur, i.e. Bukit Bintang, as well as the transaction’s structural features. Such features include mechanisms to initiate the sale of the Properties upon the occurrence of trigger events and the availability of cash reserves in the designated accounts to address liquidity risk.

The transaction’s strengths are, however, moderated by the high level of tenant-concentration risk for the Properties as YTL Corporation Berhad (the sponsor of the transaction) takes up a significant portion of their net lettable area (NLA). We further highlight the risk of potential delay in the sale of the Properties due to provisions in the transaction documents, which allow the Master Tenant or the Call Option holder to lodge a private caveat against the titles to the Properties under specific scenarios.

During the 12-month period ended 30 June 2011, Starhill had undergone a RM25 million refurbishment-and-asset-enhancement exercise. Due to the refurbishment, Starhill had experienced disruptions to its business. The negative impact from this, coupled with greater-than-expected competitive pressure, had contributed to Starhill’s underperformance; its average occupancy rate and average rental rate had declined a respective 2.0% and 7.2% over the same period. Meanwhile, Lot 10’s performance was within our expectations.

Collectively, the Properties rang up RM55.5 million of net property income (NPI) for the 12-month period, falling short of RAM Ratings’ assumptions on sustainable cashflow. Nonetheless, the Properties’ adjusted valuation remains unchanged, underpinned by their above-average asset quality and ongoing efforts to rejuvenate them, particularly Starhill. Furthermore, the additional NPI contribution from the 8,100 square feet of NLA arising from Starhill’s refurbishment has yet to be accounted for in our sustainable cashflow. The stable outlook reflects our view that the performance of the Properties will continue to support their adjusted valuations, despite a more subdued performance in recent months. Should their performance fail to recover in the medium term, however, we may revise the rating outlook to negative, with our assumptions changed accordingly.

Media contact
Ang Swee Ee
(603) 7628 1113

Wednesday, October 5, 2011

Italy's bond rating downgraded

Credit ratings agency Moody's has downgraded Italian government bonds from "Aa2" to "A2" with a negative outlook, citing risks for the financing of long-term debt and slow economic growth.

"The negative outlook reflects ongoing economic and financial risks in Italy and in the euro area," the agency said in a statement on Tuesday.

It also warned that an uncertain market environment and a risk of further deterioration in investor sentiment could constrain the country's access to public debt markets.

"If such risks were to materialise and the long-term availability of external sources of liquidity support were to remain uncertain, the country's rating could transition to substantially lower rating levels."

See AlJazeera News:


Sep 19, 2011 -

MARC has affirmed its ratings of MARC-1IS and AAAIS on Pinnacle Tower Sdn Bhd’s (PTSB) RM50 million Islamic Commercial Papers (ICP) and RM400 million Islamic Medium Term Notes (IMTN) respectively. The outlook on the ratings is stable. The rating action affects RM335 million of outstanding notes issued under the programme.

The affirmed ratings reflect the secure revenue stream backing the notes which consists of monthly lease rentals for completed telecommunication towers from the three mobile operators, Celcom Axiata Bhd, Maxis Broadband Sdn Bhd and Digi Telecommunications Sdn Bhd. The credit strength of the assigned revenue stream derives from the very strong financial profiles of the mobile operators as well as the predictable lease rentals which are based on agreed upon rates in a long-term licence agreement which will remain in effect throughout the tenure of the programme. The transaction structure provides for the direct payment of all lease rentals into a trustee-controlled collection account, and the transfer of moneys into a sinking fund account for debt service. The ratings also factor in the exclusive rights of Sacofa Sdn Bhd (Safoca), the holding company of PTSB, to construct, own and manage the towers and structures in the state of Sarawak, its status as a government-related entity of the state government of Sarawak and its strategic importance to the state’s telecommunication industry as evidenced by the state government’s willingness to provide support to Sacofa to ensure that it complies with its gearing covenants under the programme.

PTSB is a special purpose vehicle wholly-owned by Sacofa, which in turn is 69.6% owned by the State Financial Secretary of Sarawak (SFSoS), incorporated for the sole purpose of raising financing via the issuance of the ICP/IMTN programme. Sacofa, which is engaged in trading and provision of services in telecommunication infrastructure and related businesses in Sarawak, has business revenues from rental of towers, bandwidth services and fibre core. Rentals from towers are the mainstay of the company, contributing approximately 74% of total revenue. Under a ten-year Master License Agreement that commenced in June 2005, mobile operators are contractually obligated to make monthly lease rental payment to Safoca for use of the towers.

Since our last review, Sacofa has constructed another 11 towers, bringing the total number of towers to 478 as at end-December 2010. It has repaid notes totalling RM65 million since 2009, leaving RM335 million of notes outstanding. For financial year ended December 31, 2010 (FY2010), Sacofa’s revenue increased by 16% to RM123.7 million and pre-tax profit by 23% to RM44.1 million compared to the corresponding period last year. The improved performance was due to increase in the number of users for the existing towers and increased usage for its bandwidth services. Cash flow from operations increased to RM111.66 million (FY2009: RM65.04 million), with free cash flow increasing to RM93.3 million (FY2009: RM11.1 million) as fewer towers were constructed during the year; 11 towers were constructed, vis-à-vis the initial projection of 60 towers per year, which is mainly due to the deferment of capital expenditure plan by the mobile operators. The impact on the financial performance was compensated by the increase in the number of users for the existing towers and increased usage of bandwidth services. Gearing as measured by debt to equity, improved to 2.08 times (x) (FY2009: 2.73x), aided by Sacofa’s improved operating performance. CFO interest coverage strengthened to 5.78x (FY2009: 3.16x) and cash and bank balances rose to RM183.5 million as at end-December 2010 (FY2009: RM135.4 million).

MARC notes that rental payments from the mobile operators have continued to be timely and the stable outlook for the notes incorporates expectations of continued timely payments from the mobile operators for the towers.

Goh Shu Yuan, +603-2082 2268/;
Francis Xaviour Joe, +603-2082 2279/

Tuesday, October 4, 2011

Eurozone delays decision on next Greek payout

Eurozone finance ministers have delayed a decision on giving Greece the next instalment of bailout cash.

It came after Greece said it would not meet this year's deficit cutting target, sparking a sharp sell-off in stock markets.

However Eurogroup chairman Jean-Claude Juncker said Greece would not be allowed to default on its debts.

The next 8bn-euro (£6.9bn; $10.9bn) tranche of cash needs to be released by mid-November.



Sep 9, 2011 -
MARC has affirmed the ratings of Serrisa Sinar Berhad’s (Serrisa Sinar) RM200 million ICP/IMTN notes and RM20 million Junior IMTN at MARC-1ID/AAID and A+ID respectively. The outlook of the ratings is stable. The rating action affects RM100 million of outstanding notes issued under the programme. The rating of the Junior Notes reflects its subordination to the Senior Notes in respect of profit payment and principal repayment. Serrisa Sinar was incorporated to issue the Islamic debt to finance the purchase of contract receivables for the completed telecommunication towers from Weida Works Sdn Bhd (Weida Works). Weida Works obtained the rights to finance and construct telecommunication towers or structures in the state of Sabah through its joint-venture with state-backed company, Common Tower Technologies Sdn Bhd (CTT) which holds the exclusive rights to construct and manage telecommunication towers and structures in the state of Sabah.

The affirmed ratings reflect the secured revenue stream backing the notes which consist of monthly lease rentals for completed telecommunication towers from the three mobile operators, Celcom Axiata Bhd, Maxis Broadband Sdn Bhd and DiGi Telecommunications Sdn Bhd. The credit strength of the assigned revenue stream derives from the very strong financial profiles of the mobile operators as well as the predictable lease rentals which are based on agreed upon rates in a long-term licence agreement which will remain in effect throughout the tenure of the programme. The transaction structure provides for the direct payment of all lease rentals into a trustee-controlled collection account, and the transfer of a defined percentage of the collections into a sinking fund account for debt service (60% for the first seven years and 40% thereafter). The balance is made available to Weida Works for its operation and maintenance expenses and payment to CTT. The aforementioned credit strengths are reflected in Serrisa Sinar’s comfortable covenant headroom for its finance service cover ratio (FSCR); its FSCR for the 12 months ended December 12, 2010 (FY 2010) was 5.5 times (x) as compared to its minimum required FSCR of 1.5x.

Since MARC’s last rating action on August 12, 2010, Serrisa Sinar has acquired another 36 towers, bringing the total number of towers financed under the programme to 242. It has repaid notes totalling RM50 million since 2009, leaving outstanding notes at RM100 million. With the expiry of the availability period for further drawdowns under the notes programme in April 2011, no additional notes may be issued under the programme. Total contract receivables (lease payments) declined to RM91.8 million as at end-FY2010 compared to RM94.0 million a year ago. This contributed in part to higher cash and bank balances of RM21.6 million as at end-FY2010 (FY2009: RM14.9 million). Cash flow from operations interest coverage remained unchanged at 1.28 times compared to a year ago. Borrowings are adequately covered by receivables and cash and bank balances; the ratio of receivables and cash/bank balances to borrowings has been maintained above 1x since inception of the programme.

MARC notes that rental payments from the mobile operators have continued to be timely and the stable outlook for the notes incorporates expectations of continued timely payments from the mobile operators for the towers.

Goh Shu Yuan, +603-2082 2268/;
Francis Xaviour Joe, +603-2082 2279/

Monday, October 3, 2011

League table for the first 9 months of 2011 by Bond Pricing Agency Malaysia

Below is the League Table for the YTD 9 months of 2011.

2011 9months Text

Below is the League Table for third quarter of 2011.

2011Q3 text

RAM Ratings reaffirms A1 rating of Lumut Maritime Terminal's BaIDS, with stable outlook

Published on 09 September 2011
RAM Ratings has reaffirmed the A1 rating of Lumut Maritime Terminal Sdn Bhd’s (LMT or the Company) RM60 million Bai Bithaman Ajil Islamic Debt Securities (2004/2017) (BaIDS), with a stable outlook. LMT owns and operates a multi-purpose port facility (LMT Terminal) while providing operation and maintenance (O&M) services to Lekir Bulk Terminal Sdn Bhd’s (LBT) deep-water bulk jetty, which at present primarily caters to the coal-unloading requirements of TNB Janamanjung Sdn Bhd (TNBJ). LMT is also involved in the development and sale of an 885-acre industrial park known as Lumut Port Industrial Park, located next to the port.

LMT’s credit strength remains anchored by the O&M agreement with LBT, as well as its laudable operating track record. The O&M segment yields stable and predictable cashflow; LMT receives fixed payments regardless of the volume of coal handled at the jetty. Notably, cashflow from O&M services alone is expected to cover the Company’s yearly debt-servicing obligations on the BaIDS. As at end-June 2011, the amount of outstanding BaIDS came up to RM45 million relative to LMT’s RM73 million of cash reserves and an expected average annual funds from operations of around RM31 million.

Meanwhile, the Company has exclusive rights to LMT Terminal and within a 30-km radius from the port for 20 years until July 2015, under a Concession Agreement with the State Government of Perak (Perak Government). We understand that LMT is currently negotiating with the Perak Government for an extension on the concession. Given the LMT Terminal’s importance to Perak’s economy, there is a high likelihood that an extension will be granted.

On the other hand, the rating remains moderated by LMT’s position as a small port catering to a niche market of industrial customers within Lumut Port Industrial Park and the primary hinterland of central Perak. In 2010, LMT’s cargo throughput summed up to 3.30 million MT (2009: 3.26 million MT). We understand that given the existing port facilities, cargo mix and operational methodology, the Terminal’s maximum capacity is just over 4 million MT of throughput per year. Furthermore, its location inside the mouth of Sungai Dinding somewhat restricts any form of major expansion. Nonetheless, we note that LMT Terminal has a favourable cargo profile, which has proven more resilient against economic downturns due to its chiefly commodities-based consignments.

Media contact
Michael Ti
(603) 7628 1015
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