RAM Ratings reaffirms AA1 rating of Anjung Bahasa’s debt issue, with stable outlook

Published on 31 July 2012

RAM Ratings has reaffirmed the AA1 long-term rating of 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”) - via Dewan Bahasa dan Pustaka (“DBP”) - for the construction and operation of Menara Dewan Bahasa dan Pustaka. During the period under review, payments to Anjung from the GoM and DBP 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 rating reflects the assured and stable monthly payments and M&M fees as stipulated under the PA, and low operational risk given the straightforward scope of work; operating costs are minimal and largely fixed under the maintenance agreement. Other supporting factors include the tight transaction structure and restrictive covenants that mitigate cashflow leakage. Moving forward, Anjung’s debt-servicing ability is expected to remain strong; its debt service coverage ratio (with cash balances, post-distribution) is likely to hover around 2.30 to 2.78 times throughout the remaining tenure of the Junior Notes.

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

Media contact
Ben Inn
(603) 7628 1024
ben@ram.com.my