MARC has
kept unchanged its MARC-1IS and AAAIS ratings on Pinnacle Tower Sdn Bhd's RM50
million Islamic Commercial Paper (ICP) and RM400 million Islamic Medium-Term
Notes (IMTN) Programmes respectively after concluding its review which was
initiated on May 22, 2015. The rating outlook is stable.
MARC had earlier placed the ratings under review in light of the
impending dilution of the State Financial Secretary of Sarawak's (SFS) 70.5%
direct equity stake in Pinnacle Tower's parent Sacofa Sdn Bhd (Sacofa) to
20.5%. The proposed change in ownership was expected to trigger a downward
adjustment to MARC's assumption of support that Pinnacle Tower can expect to
receive from the government through Sacofa.
Pinnacle
Tower's IMTN rating had previously incorporated a two-notch rating uplift for
government support based on MARC's classification of Sacofa as a
government-related entity (GRE). Following the completion of SFS' selldown of
its direct majority stake in Sacofa, both Sacofa and Pinnacle Tower would no
longer fall within the scope of MARC's GRE rating methodology. In accordance
with the methodology, MARC would have to remove any rating uplift for implied
government support previously incorporated in the final IMTN
rating.
MARC's
current rating action is prompted by an increase in the credit enhancement for
the debt programmes. The debt programmes are now fully cash secured; funds in
the Finance Service Reserve Account totalling RM94.9 million are sufficient to
fully address payments of principal of RM90.0 million and profit on the debt
programmes which mature on March 4, 2016. Additionally, Pinnacle Tower has
undertaken not to make any further drawdowns under the programmes.
The issue
ratings and stable outlook are now underpinned by the debt programmes' full
cash backing. Going forward, Pinnacle Tower's noteholders will be insulated
from the risk of downward rating adjustments caused by a change in the
creditworthiness of Sacofa and/or removal of the uplift for potential
government support.
Contacts:
Nicola Tan, +603-2082 2262/ nicola@marc.com.my;
Yap Lai Ken, +603-2082 2247/ laiken@marc.com.my.
June 25,
2015
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