Published on 31 December 2013
RAM Ratings has revised the
outlook on Projek Lintasan Shah Alam Sdn Bhd’s (PLSA or the Company) long-term
ratings, to negative from stable. The negative outlook reflects the Company’s
weaker longer-term cash-generating capacity owing to the subdued pace of
property launches at the Alam Impian township. Concurrently, we have reaffirmed
the respective A1 and A3 ratings of the Company’s RM330 million Sukuk Ijarah
(Senior Sukuk) (2008/2027) and RM415 million Sukuk Mudharabah (Junior Sukuk)
(2008/2037). PLSA is the concessionaire for the 14.7-km Lebuhraya Kemuning-Shah
Alam (the Highway) in Selangor, under a concession agreement that is valid
until 31 July 2047. The rating difference between the Senior and Junior Sukuk
is premised on the latter’s subordination in terms of cashflow priority and
security.
A revised traffic study
completed by an external traffic consultant this year indicates that PLSA will
have insufficient funds to honour its financial obligations by 2023. The
Company has thus embarked on a refinancing exercise of the Senior Sukuk (slated
for completion by 1H 2014) while plans for the Junior Sukuk are yet to be
finalised. Any delay in the refinancing exercise will necessitate a credit
reassessment and may result in a multi-notch rating downgrade for both the
Senior and Junior Sukuk.
Meawhile, PLSA’s debt-servicing
ability is projected to remain adequate over the next 5 years, backed by its
strong cash reserves and annual pre-financing cashflow. The Company’s cashflow
during this period is expected to be supported by the steady traffic volume of
the Highway; for 10M 2013, the Highway registered an average daily traffic
volume of 60,970 vehicles. On the other hand, the rating is moderated by the
Company’s exposure to regulatory and single-project risks.
Media contact
Jocelyn Chiang
(603) 7628 1124
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