MARC has assigned a ‘AID’ rating to CSSB’s up to RM8.0 million Junior Islamic Medium-Term Notes (Junior IMTN) issued under its RM192 million MUNIF/IMTN Facility (Facility). MARC had earlier announced the affirmation of the ratings on CSSB’s RM184.0 million Senior MUNIF/IMTN (Senior Notes) at MARC-1ID /AAID on September 6, 2007. The Junior IMTN was previously unrated.

The rating of the Junior IMTN reflects its subordination to the Senior Notes in respect of profit payment and principal repayment. The ratings of the Senior Notes reflect the credit quality of the rental payment stream from creditworthy telecommunication companies (telcos) that is assessed to be MARC-1ID /AAID.  The payment stream is backed by a licence agreement that obligates the telcos to make monthly payments of agreed rent over a period of ten years. Also factored in the ratings are structural protections which ensure ring-fencing of rental payments from the telcos for the benefit of noteholders, the elimination of construction risk and the status of CSSB’s holding company, Konsortium Jaringan Selangor Sdn. Bhd. as the sole state backed company to construct and manage the telecommunication towers and structures in State of Selangor.

The forecasted cash flow for the Junior IMTN is moderately strong (base case FSCR averaging at 2.48 times), exhibiting some ability to withstand delays in rental collections as well as changes in variation orders and the number of telcos sharing the towers, with FSCR remaining above 1.0 time under the various stress scenarios. All drawdowns under the facility are contemplated within the first 3 years of issuance to allow sufficient time for the accumulation of rental payments to meet the redemption of the notes at maturity. As at December 13, 2007, the Junior IMTN has been drawdown up to RM5.0 million.