PEFINDO has affirmed its “idAAA(sf)” rating for PT Marga Lingkar Jakarta (MLJK)’s Bond I Year 2017
Thursday, August 4 2022 - 12:39 AM WIB
(August 3, 2022)--PEFINDO has affirmed its “idAAA(sf)” rating for PT Marga Lingkar Jakarta (MLJK)’s Bond I Year 2017. The bonds were issued in five tranches with different maturity dates, namely: 2020 (IDR200 billion, fully repaid); 2022 (IDR217 billion); 2024 (IDR299 billion); 2027 (IDR320 billion); and 2029 (IDR464 billion). PEFINDO is of the view that MLJK will be able to fully repay the maturing bonds of IDR217 billion due on November 8, 2022, as it had restricted funds of IDR330.5 billion as of June 30, 2022, reserved for the next bond repayment of Seri B due on November 8, 2022, 12-month interest payments of IDR110.5 billion, and IDR3 billion maintenance reserves. As of June 30, 2022, it also held IDR104.2 billion in cash and cash equivalent as a precautionary balance in the near term in case the toll revenue falls short of the expectation due to the lower traffic volume.
The rating reflects the strong transaction structure of the project bond, the project’s good economy of service area as part of the Jakarta Outer Ring Road’s (JORR) toll road, and good operating management. The rating is constrained by exposure to toll road traffic volume volatility and high financial leverage.
The rating may be lowered if MLJK’s debt service coverage ratio – as calculated by EBITDA and beginning cash, including restricted cash, divided by interest payments and bond repayments during the year – is less than 2x every year-end on a sustained basis. This may be triggered by a significant drop in EBITDA due to a combination of factors, including a decrease in JORR’s traffic volume or slower-than-expected traffic volume recovery, lower rate or delay in toll fee adjustment, and/or higher operating costs than estimated. We may also lower the rating if it fails to meet the required transaction structure. Although the debt service coverage ratio may potentially be slightly below 2x in the near to medium term, we maintain the rating as we are of the view that the potential ratio of below 2x is projected to prevail only after the second repayment of the bond and we expect the traffic volume to gradually increase in line with expected better economic growth in the near to medium term.
MLJK operates the 7.67-kilometer (km) JORR W2 North toll road for the Ulujami-Kebon Jeruk section under a concession agreement with the Indonesian Toll Road Authority, due to terminate at the end of 2044. The toll road has been in operation since July 2014, hence entailing no construction risk. Established in 2009, MLJK is a subsidiary of PT Jasa Marga (Persero) Tbk (JSMR, idAA-/Positive), the leading toll road operator in Indonesia with 44 years of experience since its establishment in 1978. At the end of June 2022, its shareholders consisted of PT Jasa Marga (Persero) Tbk (51%) and PT Jakarta Marga Jaya (49%), bought by PT Astra Tol Nusantara in November 2020. (ends)