RAM reaffirms rating of Litrak's sukuk
Malaysia RAM Ratings has reaffirmed the AA2/stable/- ratings of Lingkaran Trans Kota Sdn Bhd’s (Litrak or the Company) Sukuk Musyarakah Islamic Medium-Term Notes I Programme of up to RM1.15 billion (2008/2023) and Sukuk Musyarakah Islamic Medium-Term Notes II Programme of up to RM300 million (2008/2023) (collectively referred to as the Sukuk).
Litrak is the toll concessionaire for the 40-km Lebuhraya Damansara-Puchong (LDP or the Highway) until 14 August 2030.
The ratings reflect the LDP’s strong traffic profile, underscored by its strategic alignment straddling densely populated areas, as well as Litrak’s robust debt-coverage level.
Following the completion of upgrading works along the LDP, the Highway registered a healthier traffic growth of 3.07 per cent y-o-y in fiscal 2013 (fiscal 2012: 0.42 per cent), with average daily traffic of 461,315.
Nonetheless, proposed new roads announced under the Tenth Malaysia Plan, the upgrading of competing roads and changes in the transportation system may pose a threat to the Highway’s longer-term traffic demand. Elsewhere, as with most concession-related projects, the Company is exposed to regulatory and single-project risks.
Looking ahead, our sensitised cashflow analysis projects the Company’s debt-servicing indicators to come in strong, on the back of an annual average pre-financing cashflow of RM260 million. Our assessment assumes that Litrak will be circumspect in distributions to its shareholder, and that it will meet a minimum finance service coverage ratio (with cash balances, post-distribution and calculated on principal repayment dates) of 2 times throughout the tenure of the Sukuk.-- Reuters