KUALA LUMPUR: The Malaysian Rating Corporation Bhd (MARC) has downgraded the ratings of 10 debt notes issued by players in the Selangor water sector and cautioned of further downgrades in the absence of progress in industry restructuring.
Those issuers affected were Syarikat Bekalan Air Selangor Sdn Bhd (Syabas), Puncak Niaga (M) Sdn Bhd (PNSB), Puncak Niaga Holdings Bhd (PNHB), RUN Holding SPV Bhd, Syarikat Pengeluar Air Selangor Sdn Bhd (SPLASH) and Viable Chip (M) Sdn Bhd.
The ratings agency said on Wednesday, Sept 8 the recent regulatory and operating environment uncertainties had challenged the perception of strong implicit government support and highly predictable cash flow the water sector has historically enjoyed.
"This may have negative long-term implications for similar private-initiated infrastructure financings in the future, particularly from the angle of investor receptivity," it said.
MARC said urgent intervention by the federal and/or state government of Selangor was required to prevent a freefall of the current ratings in the following months.
"Further multiple-notch rating downgrades are likely by end of 2010 in the absence of meaningful progress in industry restructuring negotiations and actions on the part of issuers and/or project sponsors to achieve closure on the above issues," it said.
The debt issuances affected by the rating actions were Syabas' RM3.0 billion Bai Bithaman Ajil commercial papers/medium term notes (BBA CP/MTN).
MARC said the single notch downgrade of Syabas' long-term rating reflected continued cash flow challenges at the Selangor state's sole water distributor as reflected in its inability to meet its monthly payment obligations in full to bulk water producers in the state.
Also affected by the review were PNSB's RM1.02 billion Bai Bithaman Ajil Islamic debt securities (BaIDS), RM546.88 million junior notes "A" and RM435.0 million redeemable unsecured bonds (RUB), PNHB's RM546.88 million redeemable unconvertible junior notes (RUN), RUN Holding's RM200 million CP/MTN.
The ratings agency said the two-notch downgrades in PNSB's senior debt rating on its BaIDs and subordinated debt ratings on both its "A" Notes and RUB reflected heightened concerns with respect to its exposure to Syabas' creditworthiness.
"The outlook on all ratings of debt issued by PNSB, PNHB and RUNH is negative," said MARC.
Also downgraded were SPLASH's RM385.0 million Murabahah MTN and RM50.0 million Murabahah CP.
MARC said the three-notch downgrade of SPLASH's long-term debt rating on its MMTN and single-notch downgrade in its short-term debt rating reflected similar concerns as to the impact of increased single offtaker credit risk on the water treatment operator's credit profile as well as implications for upcoming debt maturities in May and July 2011.
The two-notch downgrade of Viable Chip's BaIDs rating incorporates the negative developments at SPLASH, tempered by an undertaking provided by its parent, Kumpulan Perangsang Selangor Bhd (KPSB), to provide liquidity support for the BaIDs.
Those issuers affected were Syarikat Bekalan Air Selangor Sdn Bhd (Syabas), Puncak Niaga (M) Sdn Bhd (PNSB), Puncak Niaga Holdings Bhd (PNHB), RUN Holding SPV Bhd, Syarikat Pengeluar Air Selangor Sdn Bhd (SPLASH) and Viable Chip (M) Sdn Bhd.
The ratings agency said on Wednesday, Sept 8 the recent regulatory and operating environment uncertainties had challenged the perception of strong implicit government support and highly predictable cash flow the water sector has historically enjoyed.
"This may have negative long-term implications for similar private-initiated infrastructure financings in the future, particularly from the angle of investor receptivity," it said.
MARC said urgent intervention by the federal and/or state government of Selangor was required to prevent a freefall of the current ratings in the following months.
"Further multiple-notch rating downgrades are likely by end of 2010 in the absence of meaningful progress in industry restructuring negotiations and actions on the part of issuers and/or project sponsors to achieve closure on the above issues," it said.
The debt issuances affected by the rating actions were Syabas' RM3.0 billion Bai Bithaman Ajil commercial papers/medium term notes (BBA CP/MTN).
MARC said the single notch downgrade of Syabas' long-term rating reflected continued cash flow challenges at the Selangor state's sole water distributor as reflected in its inability to meet its monthly payment obligations in full to bulk water producers in the state.
Also affected by the review were PNSB's RM1.02 billion Bai Bithaman Ajil Islamic debt securities (BaIDS), RM546.88 million junior notes "A" and RM435.0 million redeemable unsecured bonds (RUB), PNHB's RM546.88 million redeemable unconvertible junior notes (RUN), RUN Holding's RM200 million CP/MTN.
The ratings agency said the two-notch downgrades in PNSB's senior debt rating on its BaIDs and subordinated debt ratings on both its "A" Notes and RUB reflected heightened concerns with respect to its exposure to Syabas' creditworthiness.
"The outlook on all ratings of debt issued by PNSB, PNHB and RUNH is negative," said MARC.
Also downgraded were SPLASH's RM385.0 million Murabahah MTN and RM50.0 million Murabahah CP.
MARC said the three-notch downgrade of SPLASH's long-term debt rating on its MMTN and single-notch downgrade in its short-term debt rating reflected similar concerns as to the impact of increased single offtaker credit risk on the water treatment operator's credit profile as well as implications for upcoming debt maturities in May and July 2011.
The two-notch downgrade of Viable Chip's BaIDs rating incorporates the negative developments at SPLASH, tempered by an undertaking provided by its parent, Kumpulan Perangsang Selangor Bhd (KPSB), to provide liquidity support for the BaIDs.
No comments:
Post a Comment