MARC has placed the ratings of AA ID (Double AA Islamic Debt)/MARC-1ID in respect of PNSB’s RM1.02 billion ABBA serial bonds and RM350 million MuCP/MTN programme and the A rating of its RM546.875 million junior notes on a negative outlook pending the resolution of the substantial and long outstanding trade receivables which stood at RM1.14 billion as at December 2003. The maintenance of the present rating is subject to the favourable outcome of PNSB’s negotiations with the respective parties on the resolution of the burgeoning collection problem and the privatization of water distribution, going forward. Of immediate concern is PNSB’s ability to allocate RM180 million (the next 12 months debt obligations) into its Debt Service Reserve Account (DSRA) by 28 October 2004 as required under the issue structure.

The annual rating review exercise is presently in progress and MARC will continue to monitor developments on the resolution of the long outstanding receivables and privatization of water distribution and assess the impact on the ratings accordingly.