CREDIT ANALYSIS REPORT

PUTRAJAYA BINA SDN BHD - 2021

Report ID 6053890036 Popularity 89 views 24 downloads 
Report Date Sep 2021 Product  
Company / Issuer Putrajaya Bina Sdn Bhd Sector Property
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Rationale
Rating action     
MARC has affirmed its AAAIS rating on Putrajaya Bina Sdn Bhd’s (PBSB) RM1.58 billion Islamic Medium-Term Notes (Sukuk Wakalah) Programme. The rating outlook is stable.

Rationale         
The affirmed rating is mainly driven by the steady and sizable payment stream in the form of availability charges (AC) from the Malaysian government, the quantum of which is sufficient to meet the financial obligations under the Sukuk Wakalah programme. The credit strength of the Malaysian government as the obligor supports the ratings. PBSB also benefits from its status as a wholly owned subsidiary of Putrajaya Holdings Sdn Bhd (PJH, rated AAA/Stable).

PBSB completed the development of nine blocks of government office buildings and one block of shared facilities in Parcel F, Precinct 1 in Putrajaya in April 2019 and has begun receiving monthly AC payments under a 25-year asset management phase totalling RM215.6 million annually beginning in December 2019.

The company also receives maintenance charges (MC) of RM69.2 million p.a., subject to meeting specified KPIs. We view the risk of not meeting the KPIs as low given the low complexity of the nature of work involved in maintaining the buildings and the proven track record of the facilities management companies that have been contracted for government office building maintenance. As at date, MC payments have been received in full.

PBSB is required to maintain funds equivalent to its principal repayment and profit payment, one month ahead of its due date at all times, as well as to maintain a minimum Finance Service Cover Ratio (FSCR) of 1.50x following any dividend payment. Under the rating case, the company would achieve an average FSCR of 4.37x throughout the tenure of the outstanding sukuk. In MARC's sensitivity analysis, when no MC payments are received, the FSCR will range between 2.09x and 7.82x, well above the covenanted FSCR.

Rating outlook     
PBSB’s stable outlook assumes no disruption to the timely and predictable payments from the Malaysian government to meet its financial obligations throughout the tenure of the Sukuk Wakalah Programme. 

Rating trajectory

Downside scenario     
Rating pressure would arise if there are changes in the timeliness and quantum of the payment stream and/or if there are substantial changes to the shareholding structuring that would lead to an assessment of shareholder support.

Strengths
Stable and predictable cash flows from the government 
Support from strong creditworthy parent

Challenges/Risks
Meeting KPIs in order to receive management charges


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