RAM Ratings assigns AAA/Stable rating to Amanat Lebuhraya Rakyat

KUALA LUMPUR: RAM Ratings has assigned a preliminary rating of AAA/ Stable to Amanat Lebuhraya Rakyat Bhd’s (ALR) proposed senior sukuk programme of up to RM5.5 billion.

The preliminary rating reflects ALR’s superior ability to meet profit and principal obligations on a full and timely basis on the scheduled payment dates, RAM Ratings said in a statement yesterday.

“From a credit perspective, we assessed ALR and the concession companies (Lingkaran Trans Kota Sdn Bhd, Kesas Sdn Bhd, Sistem Penyuraian Trafik KL Barat Holdings Sdn Bhd and Syarikat Mengurus Air Banjir & Terowong Sdn Bhd) collectively as a single economic unit, analysing the transaction finance service coverage ratios (FSCRs) on a consolidated basis.

“The existing ratings of debts backed by the individually rated highways will be withdrawn upon their full redemption via proceeds from the proposed sukuk,” it said.

RAM Ratings added that the preliminary rating considers its assessment of the historical and projected operational and financial performance of the respective four highways, namely the Damansara-Puchong Expressway (LDP), Shah Alam Expressway (KESAS), SPRINT Expressway (SPRINT) and the Stormwater Management and Road Tunnel (SMART Tunnel), and concession companies.

It said the proposed sukuk’s repayment terms include yields (and step-up profit rates) and maturity tenures, indicative structural terms and covenants, operational risk as well as the legal and regulatory framework for the highway sector.

The rating also considers key representations made by the primary shareholder of the four highways, Gamuda Bhd, and as reflected in the supplemental concession agreement (SCA) effected at the end of April 2022 on the fully tax-exempt nature of ALR and the concession companies, freeze on toll rates until the proposed sukuk is fully repaid, an extension of the concession agreements, as well as the cabinet of Malaysia’s formal approval of the acquisition.

“ALR’s proposed sukuk would be the first highway sector Sustainable and Responsible Investment (SRI) Sukuk in the domestic market,” said RAM Ratings.

Considering the prevalence of remote work arrangements and new travel patterns, RAM Ratings expects traffic performance to gradually recover to pre-pandemic levels in early 2023 for the key highways in the portfolio.

In terms of contribution, LDP is expected to account for 47 per cent of the transaction’s revenue during the proposed sukuk’s tenure, while KESAS, SPRINT and SMART will constitute a respective 23 per cent, 26 per cent and 4.0 per cent. — Bernama