MARC ASSIGNS FINAL RATINGS OF AA-IS AND A- TO MEX II’S RM1.3 BILLION SUKUK MURABAHAH PROGRAMME AND RM150 MILLION JUNIOR BONDS ISSUANCE RESPECTIVELY; OUTLOOK STABLE

MARC has assigned final ratings of AA-_IS and A- to MEX II Sdn Bhd’s (MEX II) RM1.3 billion Sukuk Murabahah Programme (Sukuk Murabahah) and RM150 million Junior Bonds issuance (Junior Bonds). The outlook on the ratings is stable. MEX II is the toll concessionaire undertaking the design, construction, operations, maintenance and financing of the 16-km Lebuhraya Putrajaya-KLIA under a 33-year concession agreement. The final ratings have taken into account the changes to the capital structure and amendments to the financing documents since the preliminary rating announcement on March 1, 2016.

The Sukuk Murabahah and Junior Bonds will now be issued on a discounted basis with proceeds of RM1,276.7 million and RM80.0 million respectively. MARC opines that the lower proceeds from the Junior Bonds does not impact the ratings given that this has been offset by the increase in  equity contribution by project sponsor Maju Holdings Sdn Bhd to RM270 million from RM200 million. The issuer has also amended the condition precedent under the financing documents to ensure that the RM270 million equity funds are to be injected into MEX II prior to issuance of the Sukuk Murabahah and Junior Bonds.

In addition, the project cost has been revised to RM1.48 billion from RM1.49 billion which is attributed to lower interest during construction. The changes to the financing structure have resulted in a debt-to-equity ratio of 4.25 times compared to the previous 5.00 times. Meanwhile, the minimum and average finance service cover ratio (FSCR) have improved to 3.09 times and 4.06 times respectively against the previous minimum and average FSCRs of 2.99 times and 3.66 times respectively, providing improved buffer to withstand cash flow stresses.

Upon review of the final documentation of the issuances, MARC is satisfied that the terms and conditions of the Sukuk Murabahah and Junior Bonds remain commensurate with the earlier assigned preliminary ratings.

Full details on the assigned ratings have been provided in MEX II’s preliminary rating announcement on March 1, 2016. The Credit Analysis Report is available on MARC‘s website at www.marc.com.my.

Contacts: Ng Chun Kean, +603-2082 2230/ chunkean@marc.com.my; David Lee, +603-2082 2255/ david@marc.com.my.

April 19, 2016