Malaysia Rating Corp Bhd (MARC) has affirmed its rating of AA-IS on toll road concessionaire Grand Sepadu (NK) Sdn Bhd’s RM210.0 million Sukuk Murabahah. The rating outlook has been revised to stable from negative.
Grand Sepadu’s outstanding sukuk stood at RM150.0 million as at August 5.
MARC said its revised outlook incorporated a substantial reduction in the uncertainties surrounding the collection of toll compensation for Grand Sepadu from the government since 2018.
“We observe that collection of toll compensation has returned to normal after a delay in payment for year 2018,” it said in a statement today.
MARC said the compensation for 2018 had been received last year, while 50 per cent of the compensation due in 2019 had been received so far. It added that the collection was back to the regular cycle, with about 50 per cent of compensation received in the current year with the other half in the following year.
The affirmed rating considers the status of Grand Sepadu’s 17.5km New North Klang Straits Bypass as a mature asset with modest, long-term traffic growth. It said traffic volume had grown at a compounded annual growth rate of 1.25 per cent over 2015-2019, translating to a relatively stable financial performance for Grand Sepadu over the years.
The company’s financial results were within expectations in 2019, with toll revenue going up 4.9 per cent year-on-year to RM50.3 million (excluding compensation).
However, 2020 will be a challenging year in light of the impact from the Covid-19 pandemic, particularly the restrictions associated with the imposition of the movement control order (MCO) which caused traffic to fall steeply during the period.
MARC said traffic volume and toll revenue were down by about 75 per cent in the first two weeks of the MCO implementation but rose gradually in subsequent weeks, picking up as the MCO restrictions were eased.
By July 28, traffic volume and toll revenue were down by just 1.0 per cent from the week prior to the MCO commencement date.
“As the Covid-19 situation is still evolving, MARC has focused on downside scenarios in 2020 and 2021, as well as Grand Sepadu’s liquidity position. We view that Grand Sepadu could withstand up to a 40 per cent drop in toll revenue in 2020 and maintain its financial service cover ratio at the covenanted 1.75 times,” it added.
Source New Straits Times