KUALA LUMPUR (Dec 28): RAM Rating Services Bhd has downgraded the ratings of MRCB Southern Link Bhd’s RM199 million junior sukuk to D from C3, to reflect the deferment of the profit payments on the instrument.

While payments on the junior sukuk are deferrable and cumulative under the terms of its trust deeds, the rating agency said it views the deferment of the profit payments as a default.

In a statement today, RAM said it is maintaining its surveillance on MRCB Southern Link's RM845 million senior sukuk, which was last rated BB3 with a negative outlook.

On Dec 14, RAM had downgraded the junior sukuk to C3 from B1, with a negative outlook, premised on the company’s tightening liquidity as a result of the widening mismatch between its cashflow-generating ability and the annual repayments on its sukuk, and the delay in its proposed refinancing plans.

The agency had said the rating downgrade was also due to the heightened likelihood of a deferment on its profit payments falling due on Dec 23.

MRCB Southern Link is a funding conduit for the construction-related costs of the 8.62km Eastern Dispersal Link Expressway in Johor Baru.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)