Barefoot Investor: Malaysia Market: RAM Ratings reaffirms SMART’s rating

RAM Rating Services Bhd has reaffirmed the enhanced AAA(s) rating of Syarikat Mengurus Air Banjir & Terowong Sdn Bhd’s (SMART) medium-term notes of up to RM2.055 billion.

The ratings agency said on Tuesday, Sept 27 the long-term rating has a stable outlook.

To recap, SMART is a special-purpose company set up with the sole aim of undertaking the Storm-water Management and Road Tunnel Project in Kuala Lumpur.

Under the structure, all MTN issues are backed by facility payment certificates (FPCs) that represent payment undertakings by the Government.

RAM Ratings highlights that the FPCs represent the Government’s unconditional and irrevocable obligations regardless of whether the CONSTRUCTION and concession agreement is in existence.

“Given that the transaction has been structured such that the MTNs are independent from the overall risks of the company, the MTN holders only assume the credit risk of the Government. Therefore, the rating reflects the strength of the MTNs’ structure and the credit risk of the government,” it said.

Thus far, the first four series of the five MTNs, with a nominal value of RM411 million each, have been promptly and fully redeemed through the payments from the Government under the corresponding FPCs.

The payment date for the final series falls on Aug 30, 2012, after which the entire debt facility will be retired and cancelled.(


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