RAM reaffirms AAA/Stable rating for Prasarana’s bonds
KUALA LUMPUR: RAM Ratings has reaffirmed the AAA/Stable rating of Prasarana (M) Bhd’s RM5.468 billion Nominal Value Redeemable Guaranteed Serial Fixed-Rate Bonds (2003/2016).
“The rating reflects our view that Prasarana derives substantial financial flexibility from the government, given its strategic role as the owner and operator of Malaysia’s major public transport infrastructure,” the credit rating agency said in a statement yesterday.
The government’s support is further underlined by its guarantee in respect of all of Prasarana’s debts (including the rated bonds) and the conversion of a RM474.82 million government support loan into equity in 2015.
“While Prasarana’s top line has been consistently rising in
While Prasarana’s top line has been consistently rising in the last five years on the back of steady ridership growth, the group remained in the red in the financial year (FY) ended December 2015, when its operating loss before depreciation, interest and tax (OLBDIT) and pre-tax loss deepened to RM227.36 million and RM1.24 billion, respectively.
the last five years on the back of steady ridership growth, the group remained in the red in the financial year ( FY) ended December 2015, when its operating loss before depreciation, interest and tax (OLBDIT) and pre-tax loss deepened to RM227.36 million and RM1.24 billion, respectively,” it said.
It said the group’s bottom line has been further weighed down by hefty finance costs, which are expected to increase further following the issuance of a RM3 billion sukuk in February 2016.
“Given its heavy debt burden, Prasarana’s balance sheet is deemed very weak.
Despite the conversion of a loan from the government into equity, the group’s gearing ratio had more than doubled to 16.54 times as at end-December 2015 (endDecember 2014: 7.42 times).
“With the additional RM3 billion sukuk, the group’s gearing ratio is projected to exceed 18 times,” it said.
Should its losses persist, the group’s shareholders’ funds could fall into negative territory by the end of this year, given that its pre-tax loss summed up to RM1.24 billion in fiscal 2015, against an equity base of RM1.11 billion.
“Nonetheless, we note that Prasarana is in the midst of an asset revaluation exercise, which may expand its capitalisation.
“The Group is also working on initiatives to manage its hefty depreciation costs, which amounted to RM509.21 million in FY Dec 2015,” it said. — Bernama
RAM Ratings