PETALING JAYA: Boustead Holdings Bhd’s unit Mercuro Properties Sdn Bhd has proposed to issue up to RM900mil in nominal value of bonds.

In filings to Bursa Malaysia, the company said the proposed issuance would involve the issuance of four classes of senior bonds and three classes of guaranteed bonds.

“Mercuro Properties has received the preliminary ratings of the proposed issuance from RAM Rating Services Bhd. The assigned preliminary ratings are AAA, AA2 and A1 for the senior bonds while the guaranteed bonds have been assigned preliminary ratings of AAA(fg) and AA2(bg),” it said.

Boustead said the bonds issuance had received the Securities Commission’s approval on June 22.

In a separate statement, RAM Ratings said Mercuro is a special-purpose vehicle incorporated as a funding conduit for a sale-and-leaseback transaction backed by a portfolio of five properties, namely Menara Boustead KL, The Curve Shopping Mall, e@Curve, Royale Bintang the Curve and Menara Affin.

The subsidiaries of Boustead, namely Boustead Realty Sdn Bhd, Boustead Curve Sdn Bhd, Boustead Properties Bhd and Damansara Entertainment Centre Sdn Bhd will sell their beneficial interests in the properties to Mercuro, which will in turn lease them back to the respective sellers.

RAM Ratings said the properties, located in Mutiara Damansara and along Jalan Raja Chulan in Kuala Lumpur, are viewed to be of average asset quality on the whole, with RAM Property Scores of between 3.85 and 4.25 (out of a maximum score of 5.00).

“The diversified portfolio, comprising two retail malls (66% of the portfolio value), two office buildings (28%) and a hotel (6%), has a combined market value of RM1.02bil. This will provide some cushion or stability should there be a downturn in any particular industry,” said RAM Ratings Structured Finance Ratings head Siew Suet Ming.

He further said the transaction is further strengthened by various structural features including the irrevocable power of attorney to dispose of the properties upon a trigger or default event, designated accounts to control cash flow, and a 12-month senior bonds coupon reserve in the debt service reserve account.

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