Friday, November 4, 2011

RAM Ratings reaffirms Pengurusan Air SPV's RM20b sukuk ratings

KUALA LUMPUR (Nov 4): RAM Rating Services Bhd has reaffirmed the respective long- and short-term ratings of AAA (stable outlook) and P1 for Pengurusan Air SPV Bhd's (PASB) RM20 billion Islamic medium-term notes programme (2009/2039)'' and RM20 billion Islamic commercial papers programme (2009/2016) (ICP).

It said on Friday the IMTN and ICP programmes (with a combined limit of RM20 billion in nominal value) have been collectively referred to as the Sukuk.

PASB is a unit of Pengurusan Aset Air Bhd (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.

RAM Ratings said under the transaction structure, the Sukuk holders' recourse to PAAB is recognised via an irrevocable and unconditional purchase undertaking deed.

PAAB (as the obligor) will purchase the trust assets from PASB (the issuer) upon maturity'' at a price equal to the exercise price.

'The ratings of the Sukuk therefore reflect PAAB's credit risk; we thus view the Group in aggregate from a credit perspective,' it said.

RAM Ratings said the ratings reflect the strategic importance of PAAB's role under the Water Services Industry Act 2006 ' to restructure the water-services industry by consolidating ownership and responsibility in funding the water assets in Peninsular Malaysia and Labuan.

PAAB ' a unit of the government ' operates on a non-commercial basis and relies on external funding almost exclusively, backed by implicit support from the government if required.

PAAB's credit risk mirrors that of the government. A recent testament of the Government's support is PASB's procurement of a further RM20 billion IMTN programme, which is guaranteed by the Government, the first issue under this debt facility took place in February 2011.

To date, a respective RM1.15 billion and RM9.5 billion from the Sukuk and government programme remain outstanding.

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