The long term Islamic debt rating of AAAID assigned to Putrajaya Holdings Sdn Bhd’s (“PJH”) proposed RM2.2 billion Islamic Medium Term Notes (“IMTN”) Programme reflects its solid capitalization backed by the strong set of shareholders; exceptionally strong financial flexibility; and the strategic importance of PJH in the development of Putrajaya as the nation’s administrative capital. Furthermore, PJH will assign sub-lease rental income streams in respect of specific Government buildings commencing FY2011 to the IMTN holders.

PJH is the concessionaire and developer of Putrajaya. The construction of Government buildings is on a privatized basis governed under a Concession Agreement entered into with the Government. Upon completion of the buildings, the Government will grant PJH a 25-year lease for the land. PJH will simultaneously sub-lease the land and buildings back to the Government for a matching period of 25 years in return for specified rental streams. Maintenance of the buildings will be undertaken and borne entirely by the Government.

Under the issue structure, the profit payment of the IMTN for the first five years being 2006-2010 will be met from either PJH’s internal cashflow or part of the proceeds of the proposed Islamic debt. Upon the expiration of the present assignments over the sub-lease rental payments in respect of completed Government buildings under Parcels A, B, C, D and Public Facilities Precinct 10 in 2010/2013, PJH will then undertake to assign the said sub-lease rental payments to the IMTN holders. The sub-lease rental income streams will be captured in a Security Account where it will be utilised wholly for the payments of the IMTNs’ primary and secondary bonds. The progressive reduction of the debts in a serial manner over the tenure of the Facilities significantly mitigates refinancing risk.

PJH’s revenue reported significant improvement in FY2005 to approximately RM1,319 million attributed mainly to the increased progress billings in respect of the Government Quarters and steady rental contributions from the sub-lease of Government buildings. Following the drawdown of the proposed IMTN, PJH’s proforma debt to equity level (based on shareholders’ funds as at FY2005 and total borrowings as at 31 July 2005) is expected to be 3.33x; still below the cap of 4.0x imposed under the issue structure. PJH’s exceptionally strong financial flexibility is drawn from the strength of its shareholders (PETRONAS and Khazanah) and an unutilised revolving credit of RM686 million as at 31 July 2005.