KUALA LUMPUR: RAM Ratings has reaffirmed the respective long- and short-term ratings of AAA (stable outlook) and P1 for Pengurusan Air SPV Bhd's (PASB) debt notes.
The ratings agency said on Thursday, Dec 30 the debt notes were the Islamic medium-term notes and RM20 billion Islamic commercial papers programmes (Sukuk) issued under the Shariah principles of Ijarah and/or Musharakah.
PASB is a special-purpose vehicle set up as a unit of Pengurusan Aset Air Berhad (PAAB) to undertake the financing of the latter's acquisition of water assets and their accompanying liabilities in Peninsular Malaysia and Labuan.
PAAB is responsible for the subsequent development of water infrastructure in the states involved. PAAB and PASB are collectively referred to as 'the group'.
RAM Ratings said the ratings reflected the expected extraordinary support from the government of Malaysia given the strategic importance of PAAB's role under the Water Services Industry Act 2006 - to consolidate the ownership of and responsibility for funding the water assets in Peninsular Malaysia and Labuan.
'This is aimed at helping the industry players turn around their current water-related financial woes and achieve financial sustainability.
'For these purposes, PAAB will have to rely on external funding almost exclusively, backed by the GoM's implicit and extraordinary support if or when required,' it said.
RAM Ratings said under the covenants, PAAB must be a 100%-owned (directly or indirectly) subsidiary of the government of Malaysia at all times.
Under the transaction structure, the Sukuk holders' recourse to PAAB is recognised via an irrevocable and unconditional purchase undertaking deed.
Through this document, PAAB (as the obligor) undertakes to purchase the trust assets from the Issuer upon the occurrence of certain events, at a price equal to the exercise price.
PAAB's undertaking to service PASB's debt obligations will be primarily satisfied by the rental income payable by the respective state water operators.
'The rating of the Sukuk is, therefore, a reflection of PAAB's credit risk; we therefore view the Group in aggregate from a credit perspective,' it said.
The ratings agency said on Thursday, Dec 30 the debt notes were the Islamic medium-term notes and RM20 billion Islamic commercial papers programmes (Sukuk) issued under the Shariah principles of Ijarah and/or Musharakah.
PASB is a special-purpose vehicle set up as a unit of Pengurusan Aset Air Berhad (PAAB) to undertake the financing of the latter's acquisition of water assets and their accompanying liabilities in Peninsular Malaysia and Labuan.
PAAB is responsible for the subsequent development of water infrastructure in the states involved. PAAB and PASB are collectively referred to as 'the group'.
RAM Ratings said the ratings reflected the expected extraordinary support from the government of Malaysia given the strategic importance of PAAB's role under the Water Services Industry Act 2006 - to consolidate the ownership of and responsibility for funding the water assets in Peninsular Malaysia and Labuan.
'This is aimed at helping the industry players turn around their current water-related financial woes and achieve financial sustainability.
'For these purposes, PAAB will have to rely on external funding almost exclusively, backed by the GoM's implicit and extraordinary support if or when required,' it said.
RAM Ratings said under the covenants, PAAB must be a 100%-owned (directly or indirectly) subsidiary of the government of Malaysia at all times.
Under the transaction structure, the Sukuk holders' recourse to PAAB is recognised via an irrevocable and unconditional purchase undertaking deed.
Through this document, PAAB (as the obligor) undertakes to purchase the trust assets from the Issuer upon the occurrence of certain events, at a price equal to the exercise price.
PAAB's undertaking to service PASB's debt obligations will be primarily satisfied by the rental income payable by the respective state water operators.
'The rating of the Sukuk is, therefore, a reflection of PAAB's credit risk; we therefore view the Group in aggregate from a credit perspective,' it said.
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