[RAM] RAM Ratings affirms rating of West Coast Expressway's guaranteed sukuk

RAM Ratings has affirmed the AAA(bg)/Stable rating of West Coast Expressway Sdn Bhd’s (WCE or the Company) RM1 bil Guaranteed Sukuk Murabahah Programme (2015/2036) (the Sukuk). 

The rating reflects irrevocable and unconditional kafalah guarantees extended by Bank Pembangunan Malaysia Berhad (rated AAA/Stable/P1) which enhance the credit strength of the Sukuk beyond WCE’s standalone credit position. WCE is the concessionaire for the West Coast Expressway (the Expressway) that will link Banting, Selangor to Taiping, Perak. 

Construction progress stood at 93% as at end-June 2024 – six months behind schedule – largely because of delays in securing land titles and, to a lesser extent, slower construction due to geotechnical challenges. With seven out of 11 stretches operational and more opening to traffic soon, the Expressway is targeted to be fully completed in fiscal year 2026, set back a further one year from last year’s review. WCE is currently awaiting Malaysia Highway Authority approval of its application for an extension of the completion timeline on account of land acquisition delays.

While average daily traffic improved to 138,125 vehicles in 3M FY Mar 2025 (CY 2023: 64,897 vehicles), we remain cognisant of competition posed by alternative toll-free roads and sectional construction hold-ups which may inhibit the use of the Expressway in its entirety. Under RAM’s sensitised cashflow projections incorporating some delays and tapered traffic ramp-up, WCE will need to rely on its shareholders to fund remaining land and construction costs and partially service financial obligations from February 2026 onwards. 

We draw comfort from the long concession term which affords room for the refinancing or restructuring of WCE’s financial obligations. Furthermore, the Company’s shareholders, WCE Holdings Berhad and Road Builder (M) Holdings Berhad, have irrevocably and unconditionally committed to providing financial support to ensure the completion of the Expressway, along with up to RM400 mil under a cash deficiency undertaking.

As with most concession-related companies, WCE is vulnerable to regulatory and single-project risks. Transaction credit and cash flows will be reassessed for impact if the Company opts to restructure its concession agreement (CA). We do not preclude a CA renegotiation to go hand in hand with the potential refinancing of WCE’s debts.


Analytical contacts
Lee Cheng En
(603) 3385 2506
chengen@ram.com.my

Davinder Kaur Gill
(603) 3385 2525
davinder@ram.com.my

Media contact
Sakinah Arifin
(603) 3385 2500
sakinah@ram.com.my