KUALA LUMPUR (April 20): UEM Sunrise Bhd has proposed a RM2 billion Islamic Commercial Papers (ICP) programme and Islamic Medium-Term Notes (ICP/IMTN-2) programme, with a sub-limit of RM500 million for the ICP programme.

The property developer said the sukuk programmes will give the company the flexibility to raise funds via the issuance of ICPs and/or IMTNs from time to time.

“The proceeds from the issuance shall be utilised for shariah-compliant general corporate purposes of the Company,” it said in a filing with Bursa Malaysia.

Meanwhile, Malaysian Rating Corporation Berhad (MARC) has assigned preliminary ratings of MARC-1IS for the ICP programme; and AA-IS for the IMTN-2 programme.

Concurrently, the rating agency has affirmed its MARC-1IS and AA-IS ratings on UEM Sunrise’s existing RM2 billion ICP and ICP/IMTN-1 programmes. The outlook on the ratings is stable.

MARC noted that UEM Sunrise’s long-term ratings, benefit from a one-notch rating uplift for parental support from UEM Group Bhd (UEM Group) — a government-linked company which is wholly-owned by sovereign wealth fund Khazanah Nasional Bhd.

It added that the weakening prospects of the company’s domestic property projects, particularly in Johor, and its moderate credit metrics, are offset to some degree by its geographically diversified property projects and its financial flexibility stemming largely from its significant unencumbered land bank.

It noted that, amid softening property market sentiments, UEM Sunrise has scaled down its development plans in Johor by only launching one project in Iskandar Puteri in 2015, namely the Estuari, which consists of high-end landed properties with an estimated gross development value (GDV) of RM632 million.

Besides, the group’s projects in the Klang Valley have fared better and the group has also steadily expanded its property projects to Canada and Australia, which has somewhat offset the impact of the weakening domestic property market.

As at end of December 2015, the group has unbilled sales of RM5.2 billion that provide earnings visibility over the medium term.

However, over the near term, MARC expects the leverage to increase to 0.45 times, from the proposed issuance of RM500 million under the ICP/IMTN-2 programme.

As at end December last year, the group’s consolidated borrowings rose to RM2.8 billion, with the issuance of an additional RM300 million under its ICP/IMTN-1 programme.