MARC affirms ratings on Horizon Hills' Islamic Bank guaranteed debt facilities

KUALA LUMPUR: Malaysian Rating Corporation Bhd (MARC) has affirmed its rating on Horizon Hills Development Sdn Bhd's Islamic Bank Guaranteed Medium-Term Notes (IMTN) Programme of up to RM200 million at AAA-ID(bg).

The rating house also affirmed the rating on Horizon Hills' Islamic Commercial Papers (ICP) Programme of up to RM70 million at MARC-1 ID(s).

Both ratings carry a stable outlook, it said in a statement here Dec 28.

The IMTN benefits from an unconditional and irrevocable guarantee by Public Bank Bhd which carries MARC's public information rating of AAA. It is premised on the bank's well established domestic market position with about 13 per cent of commercial banking sector assets.

The affirmed short-term rating of MARC-1 for the ICP programme reflects MARC's public information corporate credit ratings on Gamuda Bhd and corporate credit rating of UEM Land Bhd, both of which jointly own Horizon Hills.

Gamuda and UEM Land have provided unconditional and irrevocable undertakings in proportion to the size of their shareholdings to meet any financial obligation under the rated debt of up to RM280 million.

Additionally, both shareholders have committed to provide equity contributions of up to RM30 million collectively to fund any cash flow deficit of the Horizon Hills project and/or to meet financial covenants under the rated facilities.

The stable rating outlook incorporates that for UEM Land, Gamuda and Public Bank, MARC said.

Horizon Hills is a 1,228-acre residential project in the 23,875-acre Nusajaya, located within the Iskandar economic zone. It was launched in 2007 with an estimated gross development value (GDV) of RM3.42 billion.

Consisting of 12 gated-and-guarded precincts, strong security features, an 18-hole golf course and clubhouse, Horizon Hills targets the middle to high end market segment.

It has achieved an average take-up rate of 77 per cent for its launched phases as of July 31 with future expected billings from contracted sales (unbilled sales) standing at RM117.9 million. The sales is supported by fairly strong expatriate demand.

For financial year ended Dec 31, 2008, Horizon Hills reported a sharp increase in revenue to RM126.2 million from RM26.1 million in the previous year with pre-tax profit rising to RM13.9 million from RM5.1 million previously.

MARC undertook a review of UEM Land and Gamuda's public information corporate credit ratings in conjunction with its review of its MARC-1 ID(s) rating on the ICP programme.

MARC is of the view that both entities continue to maintain credit profiles consistent with a MARC-1 ID(s) short-term rating.

UEM Land's government ownership and support through Khazanah Nasional Bhd, the government's investment holding arm, continues to be a major driver of its credit strength.-- Bernama