RAM Ratings has reaffirmed the AA2/Stable ratings of Lingkaran Trans Kota Sdn Bhd’s (Litrak or the Company) Sukuk Musharakah IMTN I and II Programmes (2008/2023) with a combined value of up to RM1.45 billion (collectively referred to as the Sukuk).

Published on 23 September 2016

RAM Ratings has reaffirmed the AA2/Stable ratings of Lingkaran Trans Kota Sdn Bhd’s (Litrak or the Company) Sukuk Musharakah IMTN I and II Programmes (2008/2023) with a combined value of up to RM1.45 billion (collectively referred to as the Sukuk). The ratings reflect Lebuhraya Damansara-Puchong’s (LDP or the Highway) robust traffic profile, underscored by its strategic alignment through major townships, which supports its strong debt-servicing capability.

As expected, a 31% increase in LDP toll rates for all vehicle classes (except Class 5, which remained at RM1.60), effective 15 October 2015, had resulted in traffic contracting by 1.89% in FY March 2016 – average daily traffic (ADT) on the Highway had come in at 467,317 vehicles compared to 476,299 the previous year. Subsequent monthly vehicle numbers, however, indicate that traffic is gradually recovering to pre-rate hike levels. On a forward-looking basis, ADT is anticipated to remain strong throughout the tenure of the Sukuk at an average of 405,000 vehicles under our stressed case, despite the inclusion of another rate hike and potential traffic diversion owing to competing infrastructure and proposed highways.

As such, our sensitised cashflow analysis indicates that Litrak will preserve its strong cashflow-generating ability, with an average projected annual pre-financing cashflow of about RM215 million throughout the Sukuk’s tenure. This translates into solid debt coverage, enabling the Company to maintain a strong finance service coverage ratio of at least 2 times (with cash balances, post-distribution and calculated on principal repayment dates) over the same period. In view of the Company’s lumpy repayment schedule ahead, any distribution beyond our expectation would need to be supported by traffic and cashflow outperformance. Elsewhere, as with most concession-related projects, Litrak is inherently exposed to regulatory and single-project risks.

Analytical contact                                        Media contact
Nurhayati Sulaiman                                       Padthma Subbiah
(603) 7628 1040                                            (603) 7628 1162
yati@ram.com.my                                          padthma@ram.com.my