An A3 issuer rating signifies that the issuer is fairly stable with relatively low default risk.
In a statement, Moody’s vice-president and senior credit officer Ray Tay said the change in MAHB’s outlook to “stable” reflects the strengthening of MAHB’s credit profile due to stabilisation in its overseas operations and continued resilience in its domestic market.
“Passenger traffic growth in 2018 will continue to benefit from stabilisation of the operating environment for MAHB’s wholly-owned subsidiary, Sabiha Gokcen International Airport (SGIA), which owns and operates the second largest airport in Istanbul, Turkey.
“The stable outlook is also supported by our expectation of continued robust traffic growth in Malaysia, especially for the higher yielding international passenger segment, which grew at 14.1% in 2017,” said Tay.
He said the rating house assumed mid-single digit growth in total passengers for 2018 and 2019 for the Malaysian operations, the key earnings contributor for MAHB.
For SGIA, although the 5.6% growth recorded for 2017 was lower than before the 2016 coup attempt in Turkey, Moody’s expects mid-single digit growth to continue in the next one to two years.
“We expect growth in 2018 to continue to be led by international passengers, who pay a much higher passenger service charge than that for domestic passengers,” it said.
Moody’s said the regulatory framework for MAHB is evolving, given the ongoing negotiations regarding the extension of the Operating Agreement with the Malaysian government and uncertainty around tariff determinations.
It expects the process to be protracted, given the complexity of the issues involved, and will evaluate the credit impact as more details become available.
“Nevertheless, the uncertainty around the process is a credit challenge,” it said.
The key contributor to MAHB profits and cash flow is the Kuala Lumpur International Airport, which opened in 1999 and handled about 58.5 million passengers in 2017. SGIA handled 31.3 million passengers last year.
As of Dec 31, 2017, it said MAHB was 33.2% owned by Khazanah Nasional Bhd, 12.8% by the Malaysian government-related entities, 11.5% by the Employees Provident Fund and Permodalan Nasional Bhd with 1.3%.