MARC has downgraded its rating on Bintang Bulk Mover Sdn Bhd’s (BBM) RM50 million Secured Serial Bonds to BB from A-; and placed it on MARCWatch Negative.

The downgrade is on account of the company’s stated intention to rely on an extension of its bond tenure to bridge the funding gap in relation to its sinking fund account vis-à-vis the RM20 million redemption of its final tranche of bonds due on April 1, 2009. This runs contrary to our earlier expectation that the funding shortfall would be met from undrawn credit lines or shareholder capital injection, which had been a primary rating consideration for MARC’s affirmation of the company’s A- rating earlier this month. Its apparent inability to access alternative funding commitments to address the expected funding shortfall and very constrained liquidity position, as implied by developments subsequent to MARC’s last rating action, underscore our belief that its credit profile is no longer consistent with an investment grade rating. The MARCWatch Negative incorporates increased risk of default stemming from BBM’s failure to secure the desired extension ahead of April 1, 2009.

MARC will monitor BBM’s progress in securing deferral of its bond obligations and will take the appropriate rating action as and when necessary.

Contacts:
Hafizan Haron 03-2090 2238/ hafizan@marc.com.my;
Lee Mei Lin 03-2090 2259/ meilin@marc.com.my;
Eric Chua, 03-2090 2245/ cheekiong@marc.com.my.