Tuesday, May 16, 2000
Malaysian Rating Corporation Berhad (MARC) has assigned a long-term rating of AAAID to Putrajaya Holdings Sdn Bhd’s RM1,109 million Al-Bai Bithaman Ajil (ABBA) Bonds issuance facility. The rating reflects 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 to be issued by Putrajaya Holdings Sdn Bhd (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 account in favour of the Trustee.
PJH is the 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.
After completion of the buildings, the Government will grant PJH a 25-year lease for the land. PJH will immediately 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. The responsibility to maintain the leased Government buildings throughout the lease period lies with the Government.
An initial total amount of RM1,109 million Al-Bai Bithaman Ajil (ABBA) Bonds (comprising RM765 million and RM344 million in primary and secondary bonds respectively) in four maturity series will be issued based on the leases to be created over Parcel A, Public Facilities Precinct 10 and Parcel B.
RHB Sakura Merchant Bankers and Amanah Merchant Bank, being the primary subscribers to the issue, will enter into an Asset Purchase Agreement with PJH for the purchase of the rights to the lease rentals at a purchase price to be agreed upon. Simultaneously, both banks will enter into an Asset Sale Agreement with PJH whereby the rights to the lease rentals will be resold to PJH on a deferred payment basis for a selling price of RM1,109,125,000. Unconditional obligations of PJH to settle the selling price will be securitized through the issuance of the ABBA bonds. The bonds issue will only be made after the execution of the lease and sub-lease agreements, thereby eliminating construction and completion risks. Security for the facility will take the form of a master assignment over the CA and specific assignment of the proceeds receivable by PJH under each sub-lease, created in favour of the Security Trustee.
Rental proceeds will be credited into a designated account and will be solely used for the payment of the Primary and Secondary bonds. The proceeds will, therefore, not be available for use in PJH’s operations. The balance of funds in the account will be invested in high quality instruments, substantially mitigating investment risk. Besides providing a high degree of stability to the cash flow, the sub-lease rental income alone (excluding investment income) would be more than sufficient to cover the payments under the Islamic debts.
PJH’s exceptionally strong financial flexibility is drawn from the strength of its shareholders, namely, Khazanah Nasional Bhd (40%), PETRONAS (40%) and Kumpulan Wang Amanah Negara (20%); who have demonstrated their commitment by injecting total new capital of RM1.55 billion over fiscal 1999 and 2000; enlarging its latest paid-up capital to RM2.2 billion.
PJH is the 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.
After completion of the buildings, the Government will grant PJH a 25-year lease for the land. PJH will immediately 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. The responsibility to maintain the leased Government buildings throughout the lease period lies with the Government.
An initial total amount of RM1,109 million Al-Bai Bithaman Ajil (ABBA) Bonds (comprising RM765 million and RM344 million in primary and secondary bonds respectively) in four maturity series will be issued based on the leases to be created over Parcel A, Public Facilities Precinct 10 and Parcel B.
RHB Sakura Merchant Bankers and Amanah Merchant Bank, being the primary subscribers to the issue, will enter into an Asset Purchase Agreement with PJH for the purchase of the rights to the lease rentals at a purchase price to be agreed upon. Simultaneously, both banks will enter into an Asset Sale Agreement with PJH whereby the rights to the lease rentals will be resold to PJH on a deferred payment basis for a selling price of RM1,109,125,000. Unconditional obligations of PJH to settle the selling price will be securitized through the issuance of the ABBA bonds. The bonds issue will only be made after the execution of the lease and sub-lease agreements, thereby eliminating construction and completion risks. Security for the facility will take the form of a master assignment over the CA and specific assignment of the proceeds receivable by PJH under each sub-lease, created in favour of the Security Trustee.
Rental proceeds will be credited into a designated account and will be solely used for the payment of the Primary and Secondary bonds. The proceeds will, therefore, not be available for use in PJH’s operations. The balance of funds in the account will be invested in high quality instruments, substantially mitigating investment risk. Besides providing a high degree of stability to the cash flow, the sub-lease rental income alone (excluding investment income) would be more than sufficient to cover the payments under the Islamic debts.
PJH’s exceptionally strong financial flexibility is drawn from the strength of its shareholders, namely, Khazanah Nasional Bhd (40%), PETRONAS (40%) and Kumpulan Wang Amanah Negara (20%); who have demonstrated their commitment by injecting total new capital of RM1.55 billion over fiscal 1999 and 2000; enlarging its latest paid-up capital to RM2.2 billion.