KUALA LUMPUR: RAM Ratings has reaffirmed the AAA/Stable rating of CJ Capital Sdn Bhd’s RM114mil sukuk murabahah (2010/2020).
CJ Capital is a unit of Cahaya Jauhar Sdn Bhd (CJSB), which is a 60:40 joint venture between UEM Land Bhd and the State via Permodalan Darul Ta’zim Sdn Bhd.
CJSB was awarded the contract to develop and maintain Kota Iskandar, the state’s new administrative centre in Iskandar Puteri.
RAM Ratings said on Friday the rating reflects the highly predictable cashflow, the strength and legality of the transaction’s key governing documents, the low level of counterparty risk and the tight structural features and restrictive covenants of the facility.
During the review period, an annuity payment from CJ Capital’s counterparty – the Johor State Government – was slightly delayed by two weeks, as a result of unforeseen restructuring at State Secretary Johore (Incorporated) (JSSI) which saw a change in the department issuing annuity payments and the implementation of a new IT system.
“RAM expects annuity payments to be back on schedule going forward, given the completion of the restructuring exercise as well as the track record of timely payments for the past seven years.
“Further, a five-month gap between the scheduled dates of annuity payments and the dates of principal and profit payments on the sukuk provides the company with an adequate time buffer,” said RAM Ratings.
CJ Capital was set up as a funding conduit to raise the sukuk.
In return for the construction and execution of variation orders for the first phase of the Kota Iskandar project, CJSB is entitled to receive RM15mil in annuity payments from JSSI for 10 years.