RAM assigns final ‘AA 3 (s)/Stable’ rating to MIMSB’s RM1.5 bln Sukuk Murabahah Programme

KUALA LUMPUR: RAM Ratings Services Bhd has assigned a final ‘AA 3 (s)/Stable’ rating to Medini Iskandar Malaysia Sdn Bhd’s (MIMSB) proposed 15-year RM1.5 billion Sukuk Murabahah Programme.

MIMSB is the master developer of Medini Iskandar Malaysia (Medini), a 902.4-hectare township set in the heart of Iskandar Puteri – one of the flagship zones under the broader Iskandar Malaysia economic region in Johor.

About RM1.4 billion has been invested on developing Medini’s infrastructure, which would also benefit the township’s future development.

In a statement yesterday, RAM said, MIMSB was assessed as a government-linked entity (GLE) due to national strategic investment fund Khaznah Nasional Bhd’s 52 per stake in the group.

“Based on RAM’s GLE rating criteria, MIMSB is deemed to benefit from its important role as the master developer of Medini (a key component of Iskandar Malaysia, where Khazanah is heavily invested) as well as the group’s strong relationship with the strategic fund.

“The resulting uplift was a key factor supporting MIMSB’s credit risk rating. The expertise of MIMSB’s two other major shareholders, UWI Holding Ltd and Mitsui & Co Ltd, with 20 per cent stake each, is complementary to Khazanah and the group,” it said.

On a stand-alone basis, the ratings agency said, MIMSB’s credit profile was supported by its unique position as the master developer of the Medini, which enjoyed a host of fiscal and non-fiscal incentives unique to the region, underscoring its importance to both federal and state governments.

“The group’s profile is also backed by access to a large developable area in the prime economic region, with land leases of 45 million sq ft approved gross floor area that it can directly develop or through jointventures, and/or sell to other developers,” it added.

RAM, however, said that MIMSB’s stand-alone credit profile was also impacted by the lack of property development track record as the group was only recently involved in this sector after 2012, after successfully facilitating the delivery of Medini’s infrastructure.

“Given its highly-defined role, MIMSB’s business focus is inevitably restricted to Medini, leaving the group susceptible to any adverse developments in the area.

“Looking ahead, MIMSB will be gearing up to fund its own medium- and long-term development plans whereby the group’s leverage and cashflow debt coverage metrics will weaken as a result.”Bernama