RAM reaf­firms AAA/Stable rat­ing for Prasarana’s bonds

The Borneo Post - - BUSINESS -

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

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.

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