RAM Ratings reaffirms AA2 ratings of Litrak's sukuk

Published on 20 October 2015

RAM Ratings has reaffirmed the AA2/Stable ratings of Lingkaran Trans Kota Sdn Bhd’s (Litrak or the Company) Sukuk Musharakah Medium-Term Notes I and II Programmes (2008/2023) with a combined value of up to RM1.45 billion (collectively referred to as the Sukuk). The reaffirmation of the ratings is premised on Lebuhraya Damansara-Puchong’s (LDP or the Highway) robust traffic profile, attributable to its strategic alignment along major townships, as well as Litrak’s strong financial standing, which supports its stable debt-servicing capability.
In FY March 2015, the Highway registered traffic growth of 2.01% – slightly higher than our expectation – with average daily traffic (ADT) of 476,299 vehicles. This was mainly attributed to stronger traffic growth at the Puchong Barat and Puchong Selatan toll plazas, despite the LDP’s mature traffic profile. The Highway observed modest traffic-volume growth of 0.70% as at end-August 2015, with the said 2 toll plazas continuing to contribute the bulk of ADT. Based on RAM’s sensitivities, which include the impact of assumed competing infrastructure, ADT growth is envisaged to decline an average of 0.6% during non-revision years and 6.7% when rates are increased.
On the back of an average projected annual pre-financing cashflow of RM217 million, the Company is expected to achieve a strong minimum finance service coverage ratio (with cash balances, post-distribution) of 2 times for the remaining tenure of the Sukuk. This is based on the assumption that the GoM will continue to honour its compensation arrangement with the Company in the event of non-revision of toll-rates. Also, in view of the Company’s lumpy repayment schedule ahead, any distribution beyond our expectation must be supported by traffic and cashflow outperformance. Elsewhere, as with most concession-related projects, Litrak is inherently exposed to regulatory and single-project risks.

Media contact
Nurhayati Sulaiman
(603) 7628 1040
yati@ram.com.my