MARC has reaffirmed the rating of AA- ID of Sistem Penyuraian Trafik KL Barat Sdn Bhd’s (SPRINT) RM510 million Al Bai Bithaman Ajil Islamic Debt Securities (BaIDS). MARC also reaffirmed the MARC-1 and AA- (bg) ratings of its RM125 million Revolving Underwritten Facility (RUF) and RM365 million Bank Guaranteed Serial Fixed Rate bonds (BG Bonds) respectively. The ratings outlook is stable. The BG Bonds’ reaffirmed rating of AA- (bg) reflects the strength of the bank guarantee which has also been assessed to be of AA- rating (the same as  SPRINT’s senior unsecured debt rating) based on the lowest financial institution rating of the consortium of bank guarantors. The reaffirmed ratings reflect SPRINT’s adequate debt service coverage levels, the long term fundamentals of the SPRINT Highway, continued growth in toll revenues, adequate financial flexibility, and protective covenants under the BaIDS.

SPRINT is the concession holder of SPRINT highway, a 25.5 km highway designed to ease traffic congestion in the western part of Kuala Lumpur. SPRINT is wholly-owned by Sistem Penyuraian Trafik KL Barat Holdings Sdn Bhd (SPRINT Holdings). The SPRINT highway comprises three links, Kerinchi Link, Damansara Link and Penchala Link. The Kerinchi Link and Damansara Link commenced tolling operations in September 2001, the Penchala Link commenced tolling in March of 2004. The highway had earlier experienced initial traffic volumes and revenues significantly below original forecasts which eventually prompted SPRINT to restructure its BaIDS (originally issued in 2001) in December 2005. Compared to FY2006, toll revenue and traffic volume increased by 15.2% and 13.8% respectively.  Toll revenue has exceeded the traffic consultant’s (Halcrow Consultants Sdn Bhd) projection based on its more recent 2005 traffic study by 10.72% in FY2007 (FY2006: +5.02%), underpinned by growing population and employment in catchment areas. On 28 Nov 2007, the Works Minister, Datuk Seri Samy Vellu announced that the Cabinet had decided there would be no toll increase in 2008 for SPRINT’s highways and that it will compensate SPRINT RM32 million.

SPRINT’s BaIDS restructuring exercise in 2005 has made its debt profile much more manageable by matching debt service obligations to expected cash flows. The restructuring of the BaIDS was also accompanied by a RM100 million subscription to redeemable unsecured loan stocks (RULS) of SPRINT by SPRINT Holdings and approval by the Federal Government to defer the repayment of government support loans. Shareholders of SPRINT Holdings, including Lingkaran Trans Kota Holdings Berhad (50%), Gamuda Bhd (30%) and Kumpulan Perangsang Selangor Bhd (20%) have continued to support SPRINT through an undertaking to invest up to RM200 million with the initial RM100 million invested at the issuance of the restructured BaIDS. With the RM100 million subscription of RULS by SPRINT Holdings, SPRINT’s outstanding RULS has risen to RM510 million, up from RM410 million previously. The RULS issuances have enabled SPRINT to maintain an adequate capital structure in spite of continuing losses. SPRINT derives significant financial flexibility from the ability to defer debt service on the RULS if necessary and shareholders’ commitment to invest an additional RM100 million in RULS during the tenure of the restructured BaIDS, as warranted by financial covenants under the rated facilities. 

SPRINT’s Debt Service Coverage Ratio (“DSCR”) was 2.76 as at FY2007, in compliance with the minimum covenanted DSCR of 1.5:1 under the BaIDS issuance.