MARC Ratings has affirmed its AA-IS and A- ratings on Konsortium Lebuhraya Utara-Timur (KL) Sdn
Bhd's (Kesturi) RM2.3 billion Sukuk Musharakah (Senior Sukuk) and RM180 million Redeemable
Secured Junior Bonds with a stable outlook. The rating differential between the Senior Sukuk and
Junior Bonds reflects the latter's subordinated status in line with the rating agency's methodology.

The affirmed ratings reflect the resilience of traffic on Kesturi's two expressways, Duta-Ulu Kelang
Expressway Phase 1 (DUKE 1) and Phase 2 (DUKE 2). The highways benefit from a well-established
commuter base in densely populated areas  including Damansara, Mont Kiara, Sri Hartamas, Ulu
Kelang and Setiawangsa  that generates growing traffic. In financial year ended June 30, 2023
(FY2023), average annual daily traffic (AADT) on DUKE 1 and DUKE 2 combined rose to 223,089
vehicles, 33.5% above FY2022's level and 15.6% higher than the pre-pandemic FY2019 level. Traffic
volumes continued to show strength in FY2024, with AADT increasing further to 235,618 vehicles in
the first six months from July to December 2023, above FY2023's level by 5.6%.

On assumptions of flat traffic and rates, as well as a one-year delay in government compensation,
Senior finance service coverage ratio (FSCR for Senior Sukuk) is likely to remain strong, with a
minimum of 1.79x and an average of 3.80x from FY2024 to FY2034. The rating agency opines that
on occasions, the Senior FSCR could decline below the covenanted 1.75x on delays in receiving toll
compensation as was the case in FY2023 when Senior FSCR was 1.60x. MARC Ratings views this
as a timing issue and believes Kesturi's credit fundamentals remain strong, underpinned by resilient
traffic demand.

Liquidity is adequate to cover the sukuk's upcoming profit payment of RM88.7 million and principal
repayment of RM160.0 million due on December 2, 2024, supported by cash on hand and expected
operating cash flow generation of around RM355 m