Tuesday, May 31, 2005
The ratings of MARC-2/A- assigned to Equine Capital Berhad’s (ECB) Commercial Papers /Medium-Term Notes Programme of up to RM95 million (CP/MTN Programme) reflects the ECB group’s strong competitive position through its flagship developments in Seri Kembangan and its credible track record of timely completion of quality projects. Mitigating the ratings are the inherent cyclicality of the property industry.
The ECB group is an integrated group of companies principally involved in property development. Its flagship development consists of three developments namely Taman Equine, Putra Permai and Pusat Bandar Putra Permai which collectively form the back bone of Bandar Putra Permai. Given the competitive pricing, location, built quality and track record of timely completion of projects that have been exhibited by the ECB group, MARC expects demand for future launches under these developments to remain strong.
The proceeds from the CP/ MTN Programme will be mainly utilised towards refinancing of existing bank borrowings, for development of ECB’s properties in Taman Equine and Pusat Bandar Putra Permai and for its working capital purposes. Under the issue structure, refinancing risk will be largely mitigated by the reduction schedule of the CPs, the serial redemption structure of the MTNs and the built up of monies in the Debt Service Account for the CPs and Debt Service Account for the MTNs. Liquidity risk is addressed by the maintenance of a pre-funded 6 months coupon payment for the MTNs in the Debt Service Reserve Account.
ECB group’s debt servicing capacity has historically been positive and this is expected to continue for the duration of the facility. MARC’s sensitivity analysis on the projected cash flows of the assigned phases reveals a resilient cash flow position under various scenarios of delays in progress billings and increases in development costs.
The ECB group is an integrated group of companies principally involved in property development. Its flagship development consists of three developments namely Taman Equine, Putra Permai and Pusat Bandar Putra Permai which collectively form the back bone of Bandar Putra Permai. Given the competitive pricing, location, built quality and track record of timely completion of projects that have been exhibited by the ECB group, MARC expects demand for future launches under these developments to remain strong.
The proceeds from the CP/ MTN Programme will be mainly utilised towards refinancing of existing bank borrowings, for development of ECB’s properties in Taman Equine and Pusat Bandar Putra Permai and for its working capital purposes. Under the issue structure, refinancing risk will be largely mitigated by the reduction schedule of the CPs, the serial redemption structure of the MTNs and the built up of monies in the Debt Service Account for the CPs and Debt Service Account for the MTNs. Liquidity risk is addressed by the maintenance of a pre-funded 6 months coupon payment for the MTNs in the Debt Service Reserve Account.
ECB group’s debt servicing capacity has historically been positive and this is expected to continue for the duration of the facility. MARC’s sensitivity analysis on the projected cash flows of the assigned phases reveals a resilient cash flow position under various scenarios of delays in progress billings and increases in development costs.