KUALA LUMPUR (May 3): Malaysian Ratings Corp Bhd (MARC) said it has maintained its CIS/C rating on MEX II Sdn Bhd's RM1.3 billion sukuk murabahah programme and RM150 million junior bonds.

It previously downgraded the debt instruments on March 26, 2021, amid heightened concerns of missing imminent profit payments.

“MEX II had sought an extension on the principal and profit payment that were due on April 28, 2021, in respect of tranche 1 of the sukuk, and profit payments of tranches 2 to 14 on April 30, 2021. Sukukholders have now consented to the deferment of payments totalling RM68.7 million by four months to Aug 27, 2021. Apart from the deferred sum, MEX II has another RM38.2 million due in October 2021,” MARC said in a statement today.

While the consent provides a short-term finance servicing relief to MEX II and avoids an outright default, it does not alleviate the significant concerns on MEX II’s funding issues to meet its financial obligations and complete its stalled 16.8km Putrajaya-KLIA highway project, MARC said.

Meanwhile, it noted that MEX II is in continued discussions with certain financial institutions on a sukuk restructuring programme that will incorporate additional funding to complete its stalled highway project.

Previously, the sukuk was rated BBIS, while the junior bonds were rated B. Both had been placed on MARCWatch Negative prior to the downgrade after MARC noted the liquidity pressure MEX II was facing and the likelihood that the latter would miss an upcoming payment on its sukuk.

On April 21, MEX II announced it had the deferred coupon payment due on April 30, for the RM150 million junior bonds. Less than a week later on April 27, MEX II announced it had deferred the highway operator’s RM1.3 billion sukuk murabahah principal repayment and profit payments due on April 28 and April 30 respectively for up to four months following sukukholders' approval.

MEX II is an operating entity of Maju Holdings Sdn Bhd, which also owns Maju Expressway Sdn Bhd (MESB) through wholly-owned MEX I Capital Bhd.

MESB is the concessionaire of the 26km Maju Expressway in the Klang Valley. MEX II was set up to issue bonds, raising money to finance the proposed 18km Putrajaya-KLIA highway.