Special Port Vehicle Bhd - 2014 Credit Commentary Report

MARC has affirmed the AAA rating on Special Port Vehicle Berhad’s (SPVB) RM1,310.0 million nominal amount asset-backed serial bonds facility with a negative outlook. The rating action affects the outstanding bonds of RM610.0 million. The bonds are backed by deferred payment receivables from Port Klang Authority (PKA) based on the sale and purchase of a 999.5-acre leasehold land parcel on Pulau Indah for the Port Klang Free Zone (PKFZ) project.

SPVB received the eighth repayment amounting to RM170.0 million from PKA in June 2014, boosting the cash balances in SPVB’s designated accounts to RM206.1 million. This amount is sufficient to cover SPVB’s debt obligations over the next 12 months, including the next redemption of the RM130.0 million Series 8 on July 30, 2014. PKA’s ability to remain current in its repayments is primarily attributed to governmental support as reflected by letters of support issued by the Ministry of Transport for the deferred payment receivables from PKA.

Notwithstanding the aforementioned support, the negative outlook on the rating reflects the vulnerability of future payments to government’s willingness to provide continued support for the debt that had been incurred for the problem-plagued PKFZ project. Any sign of weakening support may have an adverse impact on the affirmed rating.