RAM reaffirms Malaysia Airports’ ratings

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MAHBMalaysian ratings agency RAM Ratings has reaffirmed Malaysia Airports Holdings Berhad’s  (MAHB) global and ASEAN ratings of gA2/Stable/gP1 and seaAAA/Stable/seaP1. Concurrently, it has also reaffirmed the AAA/Stable and AA2/Stable ratings of the Group’s 2.50 billion ringgit Senior Sukuk Programme from 2013 to 2033 and the 2.50 billion ringgit Perpetual Subordinated Sukuk Programme.

At the same time, it has reaffirmed the AAA/Stable rating of Malaysia Airports Capital Berhad’s 3.10 billion ringgit Islamic MTN Programme from 2010 to 2025 and the P1 rating of its 1 billion ringgit Islamic CP Programme from 2010 to 2017.

RAM said in a release that MAHB’s AAA rating “reflects its solid business profile, which is anchored by the group’s position as the sole operator of all the 39 airports owned by the government of Malaysia.” Passenger traffic at airports under the group’s management trended upwards steadily between 2007 and 2012, with an average growth of 8 per cent per annum. For the first 9 months of 2013, MAHB registered a robust passenger-traffic growth of 16.6 per cent year-on-year.

The rating agency added that the group enjoys a strong collaborative relationship with the government, given its critical role as the operator of the country’s strategic assets and the fact that the government’s investment-holding arm – Khazanah Nasional Berhad – holds a substantial stake in the group.

However, the ratings are moderated by several challenges that MAHB faces. For instance, the group is exposed to construction risk due to the ongoing development of klia2; any additional cost or deviation from the scheduled completion date could affect its financial profile. MAHB announced in early May 2013 that the main contractor would be unable to complete klia2’s main terminal building as per the earlier expected completion date of June 28, 2013. It had subsequently set May 2, 2014 for the commencement of klia2’s operations. RAM highlights that this delay underscores the construction risk that MAHB is exposed to, noting that klia2 was about 94 per cent complete as at end-September 2013.

MAHB’s operations are also susceptible to event risk as air traffic is vulnerable to external events. The group further faces regulatory and political risks as it operates in a regulated industry, with most of its key decisions subject to the approval of the government. Elsewhere, MAHB’s ventures in India, Turkey and the Maldives are exposed to similar risks. This is underlined by the Maldivian government’s recent termination of an agreement to have MAHB manage the Ibrahim Nasir International Airport.

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Reading Time: 2 minutes

Malaysian ratings agency RAM Ratings has reaffirmed Malaysia Airports Holdings Berhad’s  (MAHB) global and ASEAN ratings of gA2/Stable/gP1 and seaAAA/Stable/seaP1. Concurrently, it has also reaffirmed the AAA/Stable and AA2/Stable ratings of the Group’s 2.50 billion ringgit Senior Sukuk Programme from 2013 to 2033 and the 2.50 billion ringgit Perpetual Subordinated Sukuk Programme.

Reading Time: 2 minutes

MAHBMalaysian ratings agency RAM Ratings has reaffirmed Malaysia Airports Holdings Berhad’s  (MAHB) global and ASEAN ratings of gA2/Stable/gP1 and seaAAA/Stable/seaP1. Concurrently, it has also reaffirmed the AAA/Stable and AA2/Stable ratings of the Group’s 2.50 billion ringgit Senior Sukuk Programme from 2013 to 2033 and the 2.50 billion ringgit Perpetual Subordinated Sukuk Programme.

At the same time, it has reaffirmed the AAA/Stable rating of Malaysia Airports Capital Berhad’s 3.10 billion ringgit Islamic MTN Programme from 2010 to 2025 and the P1 rating of its 1 billion ringgit Islamic CP Programme from 2010 to 2017.

RAM said in a release that MAHB’s AAA rating “reflects its solid business profile, which is anchored by the group’s position as the sole operator of all the 39 airports owned by the government of Malaysia.” Passenger traffic at airports under the group’s management trended upwards steadily between 2007 and 2012, with an average growth of 8 per cent per annum. For the first 9 months of 2013, MAHB registered a robust passenger-traffic growth of 16.6 per cent year-on-year.

The rating agency added that the group enjoys a strong collaborative relationship with the government, given its critical role as the operator of the country’s strategic assets and the fact that the government’s investment-holding arm – Khazanah Nasional Berhad – holds a substantial stake in the group.

However, the ratings are moderated by several challenges that MAHB faces. For instance, the group is exposed to construction risk due to the ongoing development of klia2; any additional cost or deviation from the scheduled completion date could affect its financial profile. MAHB announced in early May 2013 that the main contractor would be unable to complete klia2’s main terminal building as per the earlier expected completion date of June 28, 2013. It had subsequently set May 2, 2014 for the commencement of klia2’s operations. RAM highlights that this delay underscores the construction risk that MAHB is exposed to, noting that klia2 was about 94 per cent complete as at end-September 2013.

MAHB’s operations are also susceptible to event risk as air traffic is vulnerable to external events. The group further faces regulatory and political risks as it operates in a regulated industry, with most of its key decisions subject to the approval of the government. Elsewhere, MAHB’s ventures in India, Turkey and the Maldives are exposed to similar risks. This is underlined by the Maldivian government’s recent termination of an agreement to have MAHB manage the Ibrahim Nasir International Airport.

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