RAM Ratings has reaffirmed the AA1/Stable rating of Anjung Bahasa Sdn Bhd’s (Anjung or the Company) RM110 million Junior Notes (or the Notes).

Published on 17 July 2014

RAM Ratings has reaffirmed the AA1/Stable rating of Anjung Bahasa Sdn Bhd’s (Anjung or the Company) RM110 million Junior Notes (or the Notes).
Currently in the 14th year of its 17-year concession, Anjung is the concessionaire for the design, construction and operation of an office complex for Dewan Bahasa dan Pustaka (DBP). In return, it is entitled to monthly concession payments as well as maintenance and management (M&M) fees from the Government of Malaysia (GoM) – via DBP – over a 17-year period under the Privatisation Agreement (PA).
The rating reflects stable monthly payments under the concession and low operational risk which Anjung faces, given the relatively straightforward nature of the M&M works. Operating costs are minimal and largely fixed under the Company’s M&M agreement, while cash inflows are also fairly predictable in accordance with the PA. Counterparty risk that Anjung is exposed to is also viewed to be low, as GoM is the ultimate paymaster of the concession payments. Scheduled payments have been made with little delays since the commencement of concession in January 2001. Elsewhere, the transaction’s tight structure and restrictive covenants further mitigate the risk of cashflow leakage. To this end, Anjung’s debt-servicing ability is envisaged to remain strong. Its debt-service coverage ratio is expected to be at least 1.62 times for the remaining tenure of the Notes, underpinned by Anjung’s robust cashflow-generating ability under the concession.
Notably, the risk of early termination of the PA due to default on the part of Anjung cannot be fully eliminated. That said, such risk is viewed as remote, in view of the Company’s track record thus far and minimal performance obligations under the PA.

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Juliana Koay
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