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.
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