Tuesday, December 13, 2011

RAM Ratings reaffirms top rating for KLIA RM4.6b debt notes

KUALA LUMPUR (Dec 13): RAM Rating Services Bhd has reaffirmed the enhanced AAA(s) rating of KL International Airport Bhd's (KLIA Bhd) RM4.06 billion Islamic debt notes with a stable outlook.

The rating agency said on Tuesday the enhanced rating for the Bai' Bithaman Ajil notes issuance facility (2003/2015) was based on the government of Malaysia's unconditional and irrevocable guarantee to repay all amounts due under the KLIA notes facility.

To recap, KLIA Bhd was incorporated on May 29, 1993 as a unit of the government via the Ministry of Finance (Inc) (MoF).

KLIA Bhd was set up as a conduit for the government to fund the CONSTRUCTION [] and development of Kuala Lumpur International Airport (KLIA).

Upon the completion of KLIA in 1998, the ownership and all outstanding liabilities of the airport were transferred to MoF.

In 1999, however, the government advised the company to reinstate the outstanding liabilities in relation to the construction of the airport.

Since then, KLIA Bhd had been responsible for the repayment of all outstanding liabilities, including the KLIA Notes Facility while MoF undertook to provide all the necessary funding to settle these outstanding liabilities.

RAM Ratings said KLIA Bhd was an operationally dormant company; its income was solely derived from dividends on its investments in unit trusts and interest earned on deposits in financial institutions.

"The company's expenses are minimal and mainly comprise rental payments, legal charges, management fees and company secretarial fees. As at end-June 2011, the outstanding amount under the KLIA notes facility stood at RM2.06 billion," it said.

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