RAM assigns AA3 rating to Medini Iskandar RM1.5b Sukuk

KUALA LUMPUR:  Medini Iskandar Malaysia Sdn Bhd’s (MIMSB) proposed 15-year RM1.5bil Sukuk Murabahah Programme has been assigned a preliminary AA­3(s)/stable rating by RAM Ratings.

MIMSB is the master developer of Medini Iskandar Malaysia (Medini), a 2,230-acre township set in the heart of Iskandar Puteri. It is one of the flagship zones under the broader Iskandar Malaysia economic region in Johor. 

“We have assessed MIMSB as a government-linked entity (GLE) by virtue of the 52% effective stake in the group held by Khazanah Nasional Bhd – the Government of Malaysia’s strategic investment fund,” it said. 

RAM Rating said MIMSB is deemed to benefit from its important role as the master developer of Medini – a key component of Iskandar Malaysia, where Khazanah is heavily invested) – as well as the group’s very strong relationship with Khazanah. 

The resulting uplift is a key factor supporting MIMSB’s credit risk rating. 

Meanwhile, the expertise of MIMSB’s 2 other major shareholders, UWI Holding Ltd and Mitsui & Co. Ltd. (which have a 20% stake each), is complementary to Khazanah and the group.

Medini has been positioned as the Central Business District of Iskandar Puteri. It is near the first Legoland theme park in Asia. It is also surrounded by other landmark developments such as Educity, Pinewood Iskandar Malaysia Studios, Kota Iskandar, Puteri Harbour and Horizon Hills. 

About RM1.4bil has been invested to develop Medini's infrastructure.

RAM Rating said the (s) suffix attached to the rating reflects the well-secured nature of the sukuk to be issued under the proposed programme. 

The proposed Sukuk requires MIMSB to pledge assets with a market value of at least 1.67 times the sum of any outstanding sukuk throughout the tenure of the programme. 

RAM Rating said the group may discharge/substitute these assets from time to time on condition that the security coverage and rating are not affected. 

Any issuance under the proposed Sukuk programme will also be subject to a rating reaffirmation which will take into account, among other factors, the adequacy of security coverage and the assets pledged as collateral.