Nov 15, 2013 -
MARC has upgraded its rating on Tele-Flow Capital Sdn Bhd‘s
(Tele-Flow Capital) RM10.0 million Junior Islamic Medium Term Notes (IMTN)
Facility (Junior Notes) to AAID from AA-ID. The rating outlook is stable. The
rating action affects the RM5 million outstanding Junior Notes as at
end-September 2013. The rating upgrade follows the elimination of the
structural subordination of the Junior Notes to the Senior Notes which was
fully redeemed on April 19, 2013. The Senior Notes issued under the RM90.0
million Murabahah Underwritten Notes Issuance/IMTN Facility were rated one
notch higher than the Junior Notes at AAID.
Tele-Flow Capital is a wholly-owned subsidiary of Tele-Flow
Corporation Sdn Bhd (TCSB) and was solely established for the purpose of
issuing the IMTNs, the proceeds of which were mainly used to finance the
acquisition and construction of telecommunication (telco) towers undertaken by
TCSB in Kedah. Rental payments from the telco companies, Maxis Berhad, Celcom
Axiata Berhad and DiGi Telecommunications Sdn Bhd, are assigned from TCSB to
Tele-Flow Capital to meet the profit and principal payment under the rated
facility. The rating reflects the credit quality of the assigned rental
payments from creditworthy telcos and is weak-linked to MARC’s AA/stable public
information rating on the lowest rated telco.
MARC observes that the number of towers under TCSB has remained
at 136 since 2010 as there has been no new construction or acquisition of
towers under the rated facility. MARC notes that liquidity risk has been
eliminated with the maintenance of a fully funded designated account in which
the outstanding balance of RM5.2 million as at end-September 2013 is sufficient
to meet the final redemption of RM5 million in May 2014. Tele-Flow Capital
maintained comfortable covenant headroom with respect to its finance service
cover ratio (FSCR) which stood at 25.86 times (x) as at March 31, 2012, well
above its minimum covenant of 1.5x.
Contacts:
Sharidan Salleh, +603-2082 2254/ sharidan@marc.com.my;
Se Tho Mun Yi, +603-2082 2263 begin_of_the_skype_highlighting
+603-2082 2263 FREE end_of_the_skype_highlighting / munyi@marc.com.my.
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