Wednesday, Oct 17, 2001
Malaysian Rating Corporation Berhad (MARC) has assigned issuer ratings of AAA/MARC-1 to Putrajaya Holdings Sdn Bhd (PJH) and corporate debt ratings of AAAID/MARC-1ID to the latter’s proposed RM300 million Murabahah Commercial Papers (CP)/Medium-Term Notes (MTN). The ratings reflect PJH’s solid capitalization supported by a superior set of shareholders; exceptionally strong financial flexibility; importance of the company in the development of Putrajaya; and an issue structure secured by the specific assignment of the Government’s obligation to make progress payments in respect of the construction of Government quarters, (GQs) that will form the primary source of redemption of the CP/MTN issue.
As the concessionaire and developer of the new Federal Government Administrative Centre at Putrajaya, PJH is responsible for the formulation, planning and implementation of the development activities in Putrajaya. This include the construction of infrastructure, Government office buildings, Government quarters and certain amenities. The present Islamic issue is backed by proceeds receivable from the Government in respect of the construction of the GQs.
The construction of GQs by PJH is covered under a Design and Build Agreement (DA) signed on 15 August 2000 with the Government. At a total contract sum of RM1,059 million, the number of GQs to be built in five different precincts is 5,794 units. Development of each precinct has been assigned to a specific contractor; four of which are arranged with Joint Venture partners. Construction works commenced in 1997 and is scheduled for completion in year 2002. By 31 March 2001, an aggregate 3,193 units of GQs (representing 55% of total contracted GQs) had been delivered to the Government with another 379 units at the Certificate of Practical Completion Stage. MARC believes that construction risk is significantly mitigated given the non-complex nature of construction works and the advanced stages of construction of the remaining 2,222 units.
Liquidity risk arising from the timing difference between the monthly payments made to contractors and receipt of progress proceeds from the Government, is covered through the issuance of the CP with its various maturities. The issue specific projected cash flow, based entirely upon the progress payments to be received from the Government in respect of the GQs, exhibits adequate capacity to meet the obligations under this Islamic notes facility.
Aided by a 21.7% reduction in operating costs, PJH recorded a profit before tax of RM66.9 million as at FYE 3/2001 (FYE 3/2000: RM85.8 million) despite the decline in revenue, heavier interest burden and reduction in the share of profits of associated companies. The borrowings base swelled to RM1.72 billion from RM1.38 billion previously, following the issue of RM1.38 billion of Al-Bai Bithaman Ajil serial bonds in FY2001. Consequently, PJH’s debt-equity ratio rose to 0.75x from 0.61x, moderated by the enlarged shareholders’ funds. And after accounting for the CP/MTN issue, the proforma debt leverage ratio is projected to increase further to 1.25x; still manageable and well below the cap of 4.0x imposed under the issue structure.
PJH’s exceptionally strong financial flexibility is drawn from the strength of its shareholders, namely, Khazanah Nasional Bhd (40%), the investment holding company of the Government, and PETRONAS (40%), the national oil and gas company.
As the concessionaire and developer of the new Federal Government Administrative Centre at Putrajaya, PJH is responsible for the formulation, planning and implementation of the development activities in Putrajaya. This include the construction of infrastructure, Government office buildings, Government quarters and certain amenities. The present Islamic issue is backed by proceeds receivable from the Government in respect of the construction of the GQs.
The construction of GQs by PJH is covered under a Design and Build Agreement (DA) signed on 15 August 2000 with the Government. At a total contract sum of RM1,059 million, the number of GQs to be built in five different precincts is 5,794 units. Development of each precinct has been assigned to a specific contractor; four of which are arranged with Joint Venture partners. Construction works commenced in 1997 and is scheduled for completion in year 2002. By 31 March 2001, an aggregate 3,193 units of GQs (representing 55% of total contracted GQs) had been delivered to the Government with another 379 units at the Certificate of Practical Completion Stage. MARC believes that construction risk is significantly mitigated given the non-complex nature of construction works and the advanced stages of construction of the remaining 2,222 units.
Liquidity risk arising from the timing difference between the monthly payments made to contractors and receipt of progress proceeds from the Government, is covered through the issuance of the CP with its various maturities. The issue specific projected cash flow, based entirely upon the progress payments to be received from the Government in respect of the GQs, exhibits adequate capacity to meet the obligations under this Islamic notes facility.
Aided by a 21.7% reduction in operating costs, PJH recorded a profit before tax of RM66.9 million as at FYE 3/2001 (FYE 3/2000: RM85.8 million) despite the decline in revenue, heavier interest burden and reduction in the share of profits of associated companies. The borrowings base swelled to RM1.72 billion from RM1.38 billion previously, following the issue of RM1.38 billion of Al-Bai Bithaman Ajil serial bonds in FY2001. Consequently, PJH’s debt-equity ratio rose to 0.75x from 0.61x, moderated by the enlarged shareholders’ funds. And after accounting for the CP/MTN issue, the proforma debt leverage ratio is projected to increase further to 1.25x; still manageable and well below the cap of 4.0x imposed under the issue structure.
PJH’s exceptionally strong financial flexibility is drawn from the strength of its shareholders, namely, Khazanah Nasional Bhd (40%), the investment holding company of the Government, and PETRONAS (40%), the national oil and gas company.