RAM Ratings has reaffirmed the AA3/Stable rating of Besraya (M) Sdn Bhd’s (Besraya or the Company) RM700 million Sukuk Mudharabah Issuance Facility (2011/2028).

Published on 07 October 2014

RAM Ratings has reaffirmed the AA3/Stable rating of Besraya (M) Sdn Bhd’s (Besraya or the Company) RM700 million Sukuk Mudharabah Issuance Facility (2011/2028). Besraya is the toll concessionaire for the 16.6-km Sungai Besi Highway and the 12.3-km Besraya Eastern Extension (BEE) (collectively known as the Highways).
The rating reflects Besraya’s strong debt-coverage levels and the elimination of construction risk following BEE’s completion in April 2014. Although the timing and construction cost of the BEE exceeded initial estimates, they were well within RAM’s stressed case assumptions. The rating also considered the steady traffic from the densely-populated areas surrounding the Highways.
The 2 toll plazas on the Highways outperformed our sensitised projections, with the Mines Toll Plaza registering average daily traffic (ADT) of 92,847 vehicles in FY Mar 2014, and the Loke Yew Toll Plaza’s initial ADT coming in at 31,249 in the first month of tolling (May 2014). We anticipate stronger traffic growth due to the additional connectivity offered by the recently completed BEE. Growth will, however, be moderated by traffic diversion to future competing roads such as Maju Expressway’s Seri Kembangan interchange – the diversion is expected to be ready by early 2015.
RAM’s sensitised analysis indicates that Besraya will generate an average annual pre-financing cashflow of about RM71 million, allowing the Company to achieve a minimum finance service coverage ratio of 2 times (with cash balances, post-distribution) throughout the Sukuk’s tenure. Our assessment assumes that Besraya will pay dividends while adhering to its covenants throughout the Sukuk’s tenure.

As with other toll-road projects, Besraya is inherently exposed to regulatory and single-project risks. Regulatory risk is underlined by the Government of Malaysia’s (GoM) decision to postpone for a second year the tariff hike scheduled for the Mines Toll Plaza in 2013. Nevertheless, we derive comfort that the Company has, to date, received timely compensation from the GoM for the deferral.
Media contact
Chin Wynn
(603) 7628 1170
chinwynn@ram.com.my