[RAM] RAM Ratings affirms rating of Starbright Capital's water receivables-backed notes

RAM Ratings has affirmed the AAA/Stable rating of the RM665 million Medium-Term Notes (MTN) issued under Starbright Capital Berhad’s (Starbright or the Issuer) RM700 million Asset-Backed Medium-Term Notes Facility. 

The transaction monetises the remaining receivables due under the Termination and Settlement Agreement (TSA) between Pengurusan Air Selangor Sdn Bhd (Air Selangor or the Guarantor), Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (SPLASH or the Obligor) and Sungai Harmoni Sdn Bhd (the Originator). The receivables represent amounts due from SPLASH to Sungai Harmoni for the operations and maintenance of Phase 1 of the Sungai Selangor Water Treatment Plant. 

Established as a special-purpose funding vehicle, Starbright relies exclusively on fixed annual instalments payable by SPLASH under the TSA (Annual Instalments) to service the MTN. In the event of any missed payments, the Issuer has recourse to Air Selangor – SPLASH’s parent company – which has committed to cover any missed Annual Instalments and default interest, as necessary, upon written demand. 

The affirmation of the MTN rating is driven by Air Selangor’s credit strength (click here for more information) in its role as Guarantor for the Annual Instalments payable under the TSA. As the largest water operator in Malaysia, Air Selangor holds the sole licence for water treatment and distribution services in Selangor, Kuala Lumpur and Putrajaya. Its critical public policy function for the state of Selangor highlights the importance of ongoing state government support, especially in times of financial difficulty. In our view, the Guarantor’s creditworthiness is closely tied to Selangor’s financial resilience. The state’s robust credit standing is reflected in its top-tier classification under RAM’s State Implicit Strength Framework. 

To date, Starbright has received all scheduled Annual Instalments on time. As of end-June 2024, RM1.66 million in cash was held in the transaction’s Settlement Account. This along with the remaining RM416.97 million of receivables due is more than sufficient to meet all outstanding coupon and principal payments on the MTN. The designated accounts report for the same period indicates that actual transaction expenses stayed in line with previous estimates.

The transaction permits the Issuer to use any residual balance in the Settlement Account, once all transaction obligations are met, to pay down the outstanding deferred purchase price of the receivables on each anniversary of the issue date. 


Analytical contacts
Darrel Tiang
(603) 3385 2531
darrel@ram.com.my

Tan Han Nee
(603) 3385 2529
hannee@ram.com.my

Media contact
Sakinah Arifin
(603) 3385 2500
sakinah@ram.com.my