MARC has affirmed its ratings on Sunway Berhad's issuances under the RM2.0 billion Commercial Papers/Medium-Term Notes (CP/MTN) programmes at MARC-1/AA-. Concurrently, the rating agency also affirmed its ratings on Sunway Treasury Sukuk Sdn Bhd's issuances under the RM2.0 billion Sukuk Programme and RM10.0 billion Islamic Commercial Paper/Islamic Medium-Term Notes (ICP/IMTN) programmes at MARC-1IS(cg)/AA-IS(cg). The ratings outlook is stable.
The ratings on Sunway Treasury's issuances are equalised to Sunway's senior debt issuances on the basis of a corporate guarantee the latter has provided to its wholly-owned subsidiary's issuances.
The affirmed ratings incorporate Sunway's well-established market position in the property development, property investment and construction segments. Sunway management's longstanding experience in these segments and the group's diversified business portfolio are expected to place the group in a better position to weather the impact from the COVID-19 pandemic.
The rating action also factors in MARC's expectations that Sunway will adhere to tight financial discipline in regard to its current and projected borrowings despite the sizeable limits afforded under the group's various programmes for further drawdowns. At end-June 2020, borrowings stood slightly lower at RM9.3 billion (2019: RM9.6 billion), translating into an adjusted gross debt-to-equity (DE) ratio of 1.05x (on accounting for equity credit for its perpetual sukuk) and a net DE of 0.54x. The rating agency views that the proposed issuance of irredeemable convertible preference shares of up to RM1.1 billion by end-2020 would temper any increase in its leverage position.
Sunway's healthcare segment will take up the bulk of capex over the next four years; the group plans to invest RM1.9 billion in three new hospitals and further expand existing hospitals to increase its bed count to 2,076 from 876 at end-June 2020. The continued expansion in healthcare operationsm