MARC has downgraded PECD Berhad’s (PECD) RM200 million serial fixed rate bonds rating to D from BB+ as a result of a missed coupon payment for the bonds on December 31, 2007. PECD is a domestic public-listed construction company, which has since 2004, ventured offshore and secured contracts in Dubai, Sudan and Indonesia. 

MARC had earlier downgraded PECD’s RM200 million serial fixed rate bonds to BB+ with a negative outlook in October 2007 on the basis of continued deterioration of its financial profile and the considerable challenges faced by PECD in executing its turnaround strategy. The rating had earlier incorporated an anticipated recapitalisation exercise and asset disposals which were intended to avert the threat of imminent default posed by PECD’s near-term debt service requirements and strained liquidity. PECD’s failure to complete its recapitalisation exercise, targeted before end-2007, made default imminent.

Following the rating downgrade to D, MARC no longer has a surveillance obligation in respect of the bonds.