KUALA LUMPUR: RAM Rating Services Bhd has lifted the Rating Watch (with a negative outlook) on Berjaya Infrastructure Sdn Bhd's RM400 million medium-term notes programme (2008/2028).
The ratings agency said on Tuesday, March 8 the AA3 rating of the MTN programme was reaffirmed, with a stable outlook after the collections by its subsidiary Air Utara Indah Sdn Bhd in Kedah showed an improvement.
BISB's subsidiaries are involved in the operation, maintenance and management of water-treatment plants as well as the supply of treated water in Malaysia, Indonesia and China.
RAM Ratings said the Rating Watch was placed on Oct 8, 2010 following Air Utara Indah's poor collections.
Since then, the collections have since improved after an average 27% tariff hike and the finalisation of the corporatisation agreement between Syarikat Air Darul Aman (SADA) and the Kedah State Government in December 2010.
'BISB has since confirmed to RAM Ratings that SADA paid the first instalment (RM13.76 million) of Air Utara Indah's invoices for 2010 on Feb 20, 2011.
'SADA has agreed to pay the full 2010 invoiced amount of RM41.40 million in 4 quarterly instalments this year. We note that BISB's liquidity position has strengthened after the regularisation of AUI's collections,' it said.
RAM Ratings said the AA3 rating was supported by the BISB group's stable concession-driven businesses and extensive track record of almost two decades in the domestic market. These operations account for more than 90% of the group's revenue.
But the ratings agency said it remained concerned that BISB's better liquidity position could be weakened again if it embarks on any expansion drive to augment its overseas operations that would require sizeable capital outlay.
'In any case, future investments will necessitate a review of their impact on BISB's credit quality and, consequently, the rating of the MTN programme in view of the significant regulatory, execution and operations risks that may arise,' it said.
The ratings agency said on Tuesday, March 8 the AA3 rating of the MTN programme was reaffirmed, with a stable outlook after the collections by its subsidiary Air Utara Indah Sdn Bhd in Kedah showed an improvement.
BISB's subsidiaries are involved in the operation, maintenance and management of water-treatment plants as well as the supply of treated water in Malaysia, Indonesia and China.
RAM Ratings said the Rating Watch was placed on Oct 8, 2010 following Air Utara Indah's poor collections.
Since then, the collections have since improved after an average 27% tariff hike and the finalisation of the corporatisation agreement between Syarikat Air Darul Aman (SADA) and the Kedah State Government in December 2010.
'BISB has since confirmed to RAM Ratings that SADA paid the first instalment (RM13.76 million) of Air Utara Indah's invoices for 2010 on Feb 20, 2011.
'SADA has agreed to pay the full 2010 invoiced amount of RM41.40 million in 4 quarterly instalments this year. We note that BISB's liquidity position has strengthened after the regularisation of AUI's collections,' it said.
RAM Ratings said the AA3 rating was supported by the BISB group's stable concession-driven businesses and extensive track record of almost two decades in the domestic market. These operations account for more than 90% of the group's revenue.
But the ratings agency said it remained concerned that BISB's better liquidity position could be weakened again if it embarks on any expansion drive to augment its overseas operations that would require sizeable capital outlay.
'In any case, future investments will necessitate a review of their impact on BISB's credit quality and, consequently, the rating of the MTN programme in view of the significant regulatory, execution and operations risks that may arise,' it said.
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