RAM Ratings reaffirms AA1 rating of Anjung Bahasa’s debt issue

Published on 19 June 2013

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 with 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 (“office complex”). During the period under review, payments to Anjung from the GoM and DBP had been prompt and in accordance with the Privatisation Agreement (“PA”) between the parties. In addition, the Company had managed and maintained the office complex without any major problem.

The rating reflects the stable monthly payments and M&M fees from the GoM and low operational risk, given the straightforward scope of work under the PA; operating costs are minimal and largely fixed under the maintenance agreement. Other supporting factors include the tight transaction structure and restrictive covenants that minimise 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 come in at a minimum of 1.66 times throughout the remaining tenure of the Junior Notes.

Notably, the risk of early termination of the PA due to default on the part of Anjung cannot be fully eliminated. However, given the simplistic nature of the Company’s performance obligations under the PA, the probability of such an event is deemed remote.

Media contact

Umar Marzuki

(603) 7628 1055

umar@ram.com.my