RAM Ratings has reaffirmed the AAA/Stable rating of CJ Capital Sdn Bhd’s (CJ Capital or the Company) RM114 million Sukuk Murabahah (2010/2020) (the Sukuk).

Published on 21 Apr 2017.

RAM Ratings has reaffirmed the AAA/Stable rating of CJ Capital Sdn Bhd’s (CJ Capital or the Company) RM114 million Sukuk Murabahah (2010/2020) (the Sukuk). The rating reflects the highly predictable cashflow, the strength and legality of the transaction’s key governing documents, the low level of counterparty risk and the tight structural features and restrictive covenants of the facility.

During the review period, an annuity payment from CJ Capital’s counterparty – the Johor State Government (the State) – was slightly delayed by 2 weeks, as a result of unforeseen restructuring at State Secretary Johore (Incorporated) (JSSI) which saw a change in the department issuing annuity payments and the implementation of a new IT system. 

RAM expects annuity payments to be back on schedule going forward, given the completion of the restructuring exercise as well as the track record of timely payments for the past 7 years. Further, a 5-month gap between the scheduled dates of annuity payments and the dates of principal and profit payments on the Sukuk provides the Company with an adequate time buffer.

Wholly owned by Cahaya Jauhar Sdn Bhd (CJSB), CJ Capital was set up as a funding conduit to raise the Sukuk. CJSB, a 60:40 joint venture between UEM Land Berhad and the State via Permodalan Darul Ta’zim Sdn Bhd, was awarded the contract for the development and maintenance of Kota Iskandar (the Project), the State’s new administrative centre in Iskandar Puteri. In return for the construction and execution of variation orders for the first phase of the Project, CJSB is entitled to receive RM15 million in annuity payments from JSSI for 10 years.

Analytical contact
Wang Wai Wah
(603) 7628 1110
waiwah@ram.com.my

Media contact
Padthma Subbiah
(603) 7628 1162
padthma@ram.com.my