RAM Ratings upgrades ratings of Mecuro Properties’ Senior Class B and Senior Class C Bonds, to AAA/Stable

Published on 31 July 2015

RAM Ratings has upgraded the ratings of Mecuro Properties Sdn Bhd’s (the Company) RM12 million Senior Class B and RM15 million Senior Class C bonds under the Company’s RM900 million Nominal Value Bonds, from a respective AA2 and A1 to AAA. Concurrently, we have lifted the positive Rating Watch on the said instruments and reverted the outlook on the ratings to stable. The rating upgrades are premised on the improved credit support for the Senior Class B and Senior Class C bonds following the redemption of Mecuro’s RM140 million Senior Class A1 bonds upon their expected maturity, i.e. 31 July 2015.

On 5 January 2015, Boustead Realty Sdn Bhd had notified the trustee of its intention to exercise the first property call option to purchase Menara Boustead. The proceeds from the property call option had then been used to redeem the outstanding Senior Class A1 bonds upon their maturity. Post-redemption, the outstanding RM132 million of senior bonds are supported by the remaining collateral (4 properties), i.e. The Curve shopping mall, e@Curve, Royale Bintang the Curve and Menara Affin. The resultant loan-to-value ratios for the Senior Class B and Senior Class C bonds stand at a respective 25.3% and 28.5% (from 47.6% and 50.4%), with corresponding debt service coverage ratios of 3.65 and 3.23 times (from 1.94 and 1.80 times). These are consistent with the required credit support for an AAA rating.

RAM notes that the next property call option is specific to the purchase of The Curve shopping mall and Royale Bintang the Curve. The proceeds from their disposal are expected to be used for the redemption of Mecuro’s Senior Class B, Senior Class C, Guaranteed Class D1 and Guaranteed Class D2 bonds on their expected maturity on 31 January 2018.

Mecuro is a special-purpose vehicle incorporated as a funding conduit for a sale-and-leaseback transaction backed by a portfolio of 5 properties. The originators of the properties are subsidiaries of Bursa Malaysia-listed Boustead Holdings Berhad, a diversified conglomerate and flagship investment asset of Lembaga Tabung Angkatan Tentera.

Media contact
Lim Chern Yit
(603) 7628 1035
chernyit@ram.com.my