Monday January 7, 2013
MARC reaffirms plantation company’s SPV sukuk, notes
PETALING JAYA: Malaysian Rating Corp Bhd (MARC) has affirmed Kwantas SPV Sdn Bhd’s outstanding RM40mil class A asset-backed sukuk ijarah with a AAAID rating and a stable outlook while its RM65mil murabahah commercial papers/medium term notes (MTN) programme has also been affirmed with a stable outlook.
MARC said in a press release that the murabahah/MTN programme’s ratings and outlook has been equalised with that of the originator, Kwantas Corp Bhd, via a corporate guarantee.
“The affirmed rating of the Class A sukuk is underpinned by the robust performance of the securitised plantation estates, particularly its fresh fruit bunch (FFB) production and net operating income (NOI),” the rating agency said.
It said the rating also incorporates the collateral’s strong loan-to-value (LTV) ratio of 12.6%, which was consistent with a AAA rating.
The LTV reflects MARC’s discounted cash flow valuation of RM315mil which in turn was derived from dividing the estates stabilised NOI of RM34.7mil by a capitalisation rate of 11%.
It added that the rating’s stable outlook reflects expectation that the securitised estate would remain profitable despite the continuing volatility in crude palm oil (CPO) prices.
“The NOI of the securitised estates should comfortably cover principal repayments on the outstanding sukuk of RM40mil over its remaining tenure of two years,” it said.
Meanwhile, the affirmed ratings and outlook on the murabahah/MTN programme reflect Kwantas’ satisfactory creditworthiness supported by its cash flow generation ability.
Kwantas’ cash flow generation remained at a satisfactory level with its cash flow from operation at RM72.8mil.
It expects to see limited free cash flow generation at Kwantas going forward due to the capital expenditure planned for its estate replanting exercise.
“The company’s cash reserve of RM129.8mil and low debt burden remain key credit drivers for the company and its rating momentum,” it said.