SPECIAL PORT VEHICLE BHD - 2015 Credit Commentary Report

MARC has affirmed its 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 RM480.0 million.

The affirmed rating is premised on the satisfactory and timely repayment track record of Port Klang Authority (PKA) in relation to its deferred repayment obligations to SPVB for the purchase of 999.5 acres of leasehold land on Pulau Indah for the Port Klang Free Zone (PKFZ) project. The rating also takes into account the tangible financial support provided to PKA via soft loans by the federal government to meet the deferred repayment obligations.

On June 30, 2015, PKA made its ninth deferred repayment amounting to RM170.0 million, boosting the cash balances in SPVB’s designated accounts to RM216.2 million. This amount is sufficient to cover SPVB’s debt obligations over the next 12 months, including the upcoming redemption of the RM150.0 million Series 9 on July 30, 2015.

The negative outlook continues to reflect the vulnerability of the future deferred payments which are subject to the government’s willingness to provide continued support to meet outstanding debt obligations on the PKFZ project. Any sign of weakening support may have an adverse impact on the affirmed rating.