Maju Expressway’s missed payment has no immediate impact on MEX Capital’s sukuk rating

MEX I Capital Berhad (MEX Capital) is the parent company of Maju Expressway Sdn Bhd (MESB) and the sole investor of the RM550 mil Islamic MTN (IMTN) issued by MESB. The IMTN is not rated. The ultimate holding company of both MEX Capital and MESB is Maju Holdings Sdn Bhd.

The recent missed payment by MESB (RM50 mil principal due in June 2021) on the IMTN will not have an immediate impact on the C3/Negative rating of the RM1.35 bil Sukuk Musharakah (the Sukuk) issued by MEX Capital. Despite MESB’s missed payment, MEX Capital has sufficient cash reserves to honour the Sukuk’s upcoming profit payment in July 2021. Although available as an option to sukukholders, no default/dissolution event on the Sukuk has been declared to date as discussions on the Sukuk refinancing exercise is already at an advanced stage. Financial close is targeted for July 2021.

MESB is the concessionaire of the Maju Expressway (the Highway) and MEX Capital’s sole cashflow source to repay the Sukuk. The C3/Negative rating of the Sukuk reflects imminent risk of default should the refinancing fail. While we do not expect immediate payment risk on the Sukuk, there is increasing liquidity pressure on both MESB and MEX Capital, amid persistently anaemic traffic volumes along the Highway. This stems from ongoing pandemic-induced lockdowns and movement restrictions. 

Published on 18 June 2021

Analytical contact

Yip Chee Meng

(603) 3385 2516

cmyip@ram.com.my

Davinder Kaur Gill

(603) 3385 2525

davinder@ram.com.my

Media contact

Padthma Subbiah

(603) 3385 2577

padthma@ram.com.my

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