RAM Ratings said in a press release that it was understood that the joint offerors, UEM Group Bhd and the Employees Provident Fund, were in the final stages of discussion with the Government.

It noted that the restructuring, the key milestone for the entire exercise, should be concluded within the next few months as failure to do so would exert downward pressure on the sukuk's rating.

“Upon the completion of the restructuring exercise, the sukuk will be redeemed before its maturity and subsequently cancelled,” it said, adding that in a nutshell, the rating reflected PLUS Expressways' strong business profile anchored by the company's interests in several established domestic toll concessionaires 

It said the concessionaires, Projek Lebuhraya Utara-Selatan Bhd (PLUS), Expressway Lingkaran Tengah Sdn Bhd, Konsortium Lebuhraya Butterworth-Kulim Sdn Bhd and Linkedua (Malaysia) Bhd were delivering commendable traffic performances in the last few years.

RAM Ratings said PLUS Expressway's company-level funds from operations debt coverage (FFODC) was expected to come in at 0.58 times in fiscal 2011, compared with FFODC of 0.70 times for fiscal 2010, supported by strong operating cashflow of more than RM1bil against a debt load of RM1.38bil.

“Should the corporate restructuring be long drawn out, its FFODC is expected to weaken to 0.27 times in fiscal 2012. This is based on our assumption that all PLUS Expressways toll concessionaires will not receive compensation for the five-year freeze on toll rates,” it said.

It said that to-date, the company's toll concessionaires had yet to be paid the outstanding balance of their compensation for 2010.

The agency said the rating was moderated by the company's exposure to concentration risk as the bulk of the cashflow was derived from PLUS with a possible disruption in cashflow if there were any significant changes to the terms of the concession agreement.

“As PLUS Expressways continues to focus on expansion opportunities abroad to reinforce its global presence, it will also be exposed to, inter alia, construction, operations and traffic-volume risks as in the case of its investments in Indonesia and India,” it said.

It said this would necessitate reviews of their impact on credit quality and consequently the sukuk's rating as similar to other toll concessionaires, the company was also exposed to regulatory risk, both at home and abroad.