Monday, Feb 05, 2001
Malaysian Rating Corporation Berhad (MARC) has assigned long-term ratings of AAAID to Putrajaya Holdings Sdn Bhd’s (PJH) RM861.14 million Al-Bai Bithaman Ajil (ABBA) Bonds (Parcel C) and RM1,288.88 million Al-Bai Bithaman Ajil (ABBA) Bonds (Parcel D) issuance facilities. The ratings reflect the superior credit quality which essentially is that of the Government who will be responsible for the sub-lease rental payments in respect of the Government buildings, that will form the primary source of repayment of the Islamic debt securities issued by PJH. The issue structure is strengthened through the creation of a designated account to hold the rental proceeds; restriction in the utilization of such proceeds for the payment of the primary and secondary bonds only and the specific assignment of the sub-lease rental receivables and designated account in favour of the Trustee.
PJH is the concessionaire and developer of the new Federal Government Administrative Centre at Putrajaya. It is responsible for the formulation and implementation of the planning and development activities in Putrajaya. The construction of Government buildings on a privatized basis by PJH is covered under a Concession Agreement (CA) signed with the Government in June 1999.
Upon completion of the buildings, the Government will grant PJH a 25-year lease for the land. PJH will simultaneously sub-lease the land and buildings back to the Government for a matching period of 25 years in return for a specified rental stream. The sub-lease rental rates are fixed for three consecutive years and then, graduated based on an annual compounded rate of 3% after every third year. Based on the schedule contained in the sub-lease agreement, the rental payments are to be made quarterly in advance by the Government.
The two tranches of bonds in 11 maturity series are based on the purchase and sale of the rights to the sub-lease rentals in respect of Parcels C & D, between the primary subscribers to the issue and PJH. As the bonds are issued after the receipt of the Certificate of Practical Completion for the respective Government buildings, construction and completion risks are completely eliminated. Maintenance of the buildings will be undertaken and borne by the Government.
Security for the facilities will take the form of a master assignment over the CA and specific assignment of the rentals receivable under each sub-lease, created in favour of the Security Trustee.
Rental proceeds will be credited into the respective designated account and will be solely used for the payment of the primary and secondary bonds of the respective tranche. The sub-lease rental income streams afford stability to the cash flow and a comfortable margin of coverage over the respective ABBA’s debt servicing requirement. Refinancing risk associated with the payment structure of the bonds, is substantially mitigated through the progressive reduction of the total debt size over the tenure of the respective facility.
PJH’s revenue base expanded to RM387.41 million from RM4.69 million in FY99, with the maiden inclusion of sub-lease rentals from completed Government buildings. Profit before tax surged to RM85.82 million compared to the loss of RM8.38 million suffered previously. Debt leverage on a pro-forma basis will rise to 1.41x; a manageable level against an enlarged shareholders’ funds of RM2.26 billion. 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.
PJH is the concessionaire and developer of the new Federal Government Administrative Centre at Putrajaya. It is responsible for the formulation and implementation of the planning and development activities in Putrajaya. The construction of Government buildings on a privatized basis by PJH is covered under a Concession Agreement (CA) signed with the Government in June 1999.
Upon completion of the buildings, the Government will grant PJH a 25-year lease for the land. PJH will simultaneously sub-lease the land and buildings back to the Government for a matching period of 25 years in return for a specified rental stream. The sub-lease rental rates are fixed for three consecutive years and then, graduated based on an annual compounded rate of 3% after every third year. Based on the schedule contained in the sub-lease agreement, the rental payments are to be made quarterly in advance by the Government.
The two tranches of bonds in 11 maturity series are based on the purchase and sale of the rights to the sub-lease rentals in respect of Parcels C & D, between the primary subscribers to the issue and PJH. As the bonds are issued after the receipt of the Certificate of Practical Completion for the respective Government buildings, construction and completion risks are completely eliminated. Maintenance of the buildings will be undertaken and borne by the Government.
Security for the facilities will take the form of a master assignment over the CA and specific assignment of the rentals receivable under each sub-lease, created in favour of the Security Trustee.
Rental proceeds will be credited into the respective designated account and will be solely used for the payment of the primary and secondary bonds of the respective tranche. The sub-lease rental income streams afford stability to the cash flow and a comfortable margin of coverage over the respective ABBA’s debt servicing requirement. Refinancing risk associated with the payment structure of the bonds, is substantially mitigated through the progressive reduction of the total debt size over the tenure of the respective facility.
PJH’s revenue base expanded to RM387.41 million from RM4.69 million in FY99, with the maiden inclusion of sub-lease rentals from completed Government buildings. Profit before tax surged to RM85.82 million compared to the loss of RM8.38 million suffered previously. Debt leverage on a pro-forma basis will rise to 1.41x; a manageable level against an enlarged shareholders’ funds of RM2.26 billion. 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.