RAM reaffirms ratings for Litrak’s sukuk

PETALING JAYA: RAM Ratings has reaffirmed the AA2/Stable ratings on Lingkaran Trans Kota Sdn Bhd’s (Litrak) RM1.45 billion Sukuk Musharakah Programmes (2008/2023).

In a note yesterday, RAM said the reaffirmation of the ratings is based on its expectation that the company will maintain its strong cashflow generation, underpinned by the Lebuhraya Damansara-Puchong’s (LDP) mature traffic profile.

“While we expect the highway’s traffic profile to stay healthy in supporting its debt-servicing capability, we remain cognisant of the longer-term impact of another scheduled toll hike (up 47% to RM3.10) and the concurrent development of alternative routes and public transportation projects,” RAM Ratings’ co-head of infrastructure and utilities ratings Davinder Kaur Gill said.

She said the highway’s average daily traffic (ADT) is anticipated to be 387,000 vehicles throughout the tenure of the sukuk under its stressed case vis-à-vis actual ADT of 453,970 vehicles in March 2017.

Based on its sensitivities, Davinder Kaur said, the company’s finance service coverage ratios (FSCRs, with cash balances, postdistribution on payment dates) are envisaged to come in at a minimum of two times throughout the sukuk’s tenure.

While Litrak’s projected annual average prefinancing cash flow of RM212 million should sufficiently meet its financial obligations, she said it is crucial that cash retention is prioritised beginning fiscal 2018, considering lumpy principal repayments ahead and given that the company’s FSCR (without cash balances) will fall below one time in certain years.

“Any distribution beyond our expectation should be supported by traffic and cash flow outperformance,” she said.