MARC Ratings has affirmed its AA_IS rating on ANIH Berhad's RM2.5 billion Senior Sukuk Musharakah Programme with a stable outlook. ANIH is the concessionaire of Kuala Lumpur-Karak Highway (KL-Karak) and Phase 1 of East Coast Expressway (ECE1) until 2032. 

The rating reflects the steady traffic on ANIH’s mature road network, providing strong cash flow generation and a finance service cover ratio (FSCR) of around 1.9x in 2022, above the covenanted level of 1.75x. The rating also benefits from the subordinated and equity-like features of ANIH’s RM620 million Junior Bonds, giving some headroom against operational underperformance, but this is partly offset by a high financial leverage. 

Both KL-Karak and ECE1 have since recovered from pandemic declines with traffic surpassing pre-pandemic levels. Traffic outpaced our expectation through 1QFY2023 (April-June 2022), with KL-Karak and ECE1 having reported traffic volume increases of 8% and 27.5% from the same period in 2019. Prior to the pandemic, aggregate traffic on the two highways grew at a moderate compound annual growth rate of 1%-2% over FY2015-FY2019, reflecting a mature system.

In MARC Ratings’ sensitised case, with a more moderate traffic growth assumption of 1% per year, we project minimum and average FSCR of 1.8x and 1.9x through FY2030, against ANIH’s base case of 1.9x and 2.0x. We deem ANIH’s liquidity to be adequate with RM243.2 million of cash as of end-June 2022. This, together with our expectation of broadly normal operating cash flow of over RM250 million in 2022-2023, is sufficient to cover its RM160.0 million of sukuk principal due on November 29, 2022. 

Ahmad Ikmal Mohd Shahril, +603-2717 2963/ ikmal@marc.com.my 

Hafiza Abdul Rashid, +603-2717 2955/ hafiza@marc.com.my