Friday, November 26, 2010

RAM Ratings affirms New Pantai Expressway's RM740m debt notes

KUALA LUMPUR:'' RAM Ratings has reaffirmed the ratings of New Pantai Expressway Sdn Bhd's debt notes totaling RM740 million with a stable outlook.

They are the AA3 rating of its RM490 million Senior Bai' Bithaman Ajil Notes (2003/2014) (Senior Notes) and AA3(s) rating RM250 million Junior Bai' Bithaman Ajil Notes (2003/2016) (Junior Notes).

RAM Ratings said on Friday, Nov 26 the rating of the Senior Notes remains supported by the 19.6-km New Pantai Highway's (NPH or the Highway) sustainable traffic growth from established townships and strong debt-coverage levels.

In FY March 2010, the NPH registered an average daily traffic (ADT) of 129,428 vehicles, on the back of the robust traffic flows at the Pantai Dalam and PJS 2 Subang-bound toll plazas; the ADT was relatively stable compared to the previous corresponding period, despite the abolishment of toll collection at the PJS 2 Kuala Lumpur-bound toll plaza in February 2009.

As traffic volume continued improving in 1Q FY Mar 2011, the Highway's ADT rose 6.91% year-on-year to 138,375 vehicles, supported by organic growth arising from the townships along its alignment.

Moving forward, NPESB is envisaged to maintain its strong debt-coverage levels, with a projected minimum Senior Finance Service Coverage Ratio (FSCR) of 2.74 times (with cash balances, post-distribution).

After having wrapped up the debt-restructuring exercise for its Senior Notes on 30 April 2010, the outstanding amount has been reduced from RM370 million to RM259 million.

Meanwhile, the enhanced rating of the Junior Notes reflects the strength of the corporate guarantee from IJM Corporation Berhad (NPESB's ultimate holding company), pursuant to the Payment Guarantee that unconditionally and irrevocably guarantees the Junior Notes throughout the existence of the Senior Notes.

As the corporate guarantee is only applicable while the Senior Notes are still outstanding, the rating of the Junior Notes will be reassessed upon full redemption of the Senior Notes on 31 October 2014.

Similar to other toll-road concessionaires, however, NPESB is also exposed to regulatory and single-project risks. NPESB holds the concession for the CONSTRUCTION [], maintenance and toll collections of the Highway.

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