FW: RAM Ratings reaffirms AAA rating of CJ Capital's sukuk

 

Published on 09 Apr 2018.

 

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

During the review period, the annuity payment from CJ Capital’s counterparty – the Johor State Government (the State) - was paid one month ahead of the scheduled date. This is unlike the previous year, when the annuity payment from the State was delayed for two weeks amid the unforeseen, one-off implementation of a new IT system and a change in the department issuing annuity payments. Following the completion of both in the same period, RAM opines that the recurrence of such a delay is unlikely. A 5-month gap between the scheduled dates of annuity payments and the dates of principal and profit payments of the Sukuk provides the Company with an adequate time buffer.

Wholly owned by Cahaya Jauhar Sdn Bhd (CJSB), CJ Capital had been 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, has been 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