RAM Ratings puts Cerah Sama's Islamic securities on Rating Watch with developing outlook

Published on 02 March 2012
RAM Ratings has placed the AA3 rating of Cerah Sama Sdn Bhd’s (“Cerah Sama”) RM600 million Sukuk programme on Rating Watch, with a developing outlook. Cerah Sama is the investment-holding company that wholly owns Grand Saga Sdn Bhd (“Grand Saga”), the toll operator and concessionaire for the Cheras-Kajang Highway (“the Highway”).

This rating action follows the Government’s announcement that toll collection will be abolished at 2 points (out of 4) along the Highway. Effective 2 March 2012, toll users will be exempted from paying the RM1.00 tariff at the Batu 9 toll plaza when heading towards Kuala Lumpur, and the RM0.90 tariff at the Batu 11 toll plaza when heading towards Kajang (from Kuala Lumpur). The repayment of Cerah Sama’s Sukuk programme is anchored by toll revenue from the Cheras-Kajang Highway.

We expect the Rating Watch to be resolved once the Highway’s compensation terms are made known to us, as any changes to the concession terms will need to be reassessed for credit implications. We note that Grand Saga had been adequately compensated by the Government for previous amendments of its concession agreement.

RAM Ratings' Rating Watch highlights a possible change in an issuer's 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 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
Davinder Kaur Gill
(603) 7628 1118
davinder@ram.com.my