RAM Ratings reaffirms AA3 rating of Kesas’ Islamic debt issue

KUALA LUMPUR: RAM Ratings has reaffirmed its AA3/stable/- rating of Kesas Sdn Bhd’s RM800mil Al-Bai’ Bithaman Ajil Islamic Debt Securities (2002/2014).

According to ratings agency, Kesas – which holds, till Aug 18, 2023, the toll concession for the 35km Shah Alam Expressway (SAE) linking the KL-Seremban Highway in the east and Pandamaran in the west – has strong debt-servicing aptitude.

Moreover, it added, the rating reflects the healthy traffic profile supported by the SAE’s strategic alignment.

“Despite the Expressway’s exposure to competition from other routes, such as Federal Highway Route 2, the New Pantai Expressway and toll-free roads, the SAE maintained its commendable traffic-volume growth in fiscal 2013 with an average daily traffic of 290,653 vehicles (+5.5% y-o-y),” the ratings agency said.

“On the other hand, the rating is moderated by the company’s exposure to regulatory and single-project risks.

It said it expected Kesas’s debt-servicing indicators to remain in line with expectations – with its finance service coverage ratios to register at 1.37 times in October 2013 (due to a lumpy principal repayment of RM250mil) and 2.10 times (in October 2014).

“Our assessment excludes any distribution to Kesas’s shareholders prior to the maturity of the Al-Bai Debt Securities, as we expect the company to prioritise the fulfilment of its debt obligations.

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