[RAM] RAM Ratings assigns final AA2 rating to Ideal Water Resources' RM255 mil Tranche 2 Sukuk

RAM Ratings has assigned a final AA₂/Stable rating to Ideal Water Resources Sdn Bhd’s (IWR, the Issuer) RM255 mil Tranche 2 Sukuk (2025/2034) (Tranche 2 Sukuk) under its existing Sukuk Murabahah Programme of up to RM1 bil (2023/-).

In doing so, we have reviewed the updated transaction documents and find them to be in line with our expectations when the preliminary rating was assigned (published here). The updates and final rating incorporate the transaction’s revised cashflow projections reflecting final allocated utilisation of proceeds, lower profit payments, finalised tax assumptions endorsed by the tax advisor, and consequently, an amended dividend payment schedule.

IWR, a funding vehicle of Puncak Niaga Holdings Berhad (Puncak Niaga or Group), will use the bulk of the proceeds from its RM255 mil proposed Sukuk to advance to the Group and its related company Pujian Bayu Sdn Bhd (Pujian Bayu). The remaining proceeds will be used to partially redeem IWR’s existing Tranche 1 Sukuk, pre-fund designated accounts and defray issuance expenses. Pujian Bayu’s MTN (rated AA₃/stable by RAM) will be fully redeemed upon the receipt of advances from IWR.

The AA₂ assigned rating continues to be anchored by the concession-backed project economics, underpinned by the predictable and stable, concession-backed cashflows from IWR’s sister company, TRIplc Ventures Sdn Bhd (TVSB), as well as restrictions, limitations and covenants under the transaction. The transaction’s strong debt coverage under RAM’s stressed analysis is projected to remain above the AA₂ threshold required for a low-complexity private finance initiative/public-private partnership project.

While the rating is notched down to reflect IWR’s subordinated position to TVSB’s lenders at present, the transaction rating will be upgraded in the next few months once the security package for the benefit of the IWR Sukukholders is no longer second ranking relative to TVSB’s other obligations. To service its dues under the Sukuk, IWR is entirely dependent on cashflows from TVSB via coupon and principal repayments on its Senior MTN and Junior Notes as well as dividend streams, after the latter meets its own operational obligations.

Please see IWR’s final rating rationale for further details. RAM will maintain surveillance of the transaction and the assigned ratings as long as there are outstanding rated sukuk under this issuance.


Analytical contacts
Chew Chiang Lim
(603) 2708 8297
chianglim@ram.com.my

Davinder Kaur Gill
(603) 2708 8220
davinder@ram.com.my

Media contact
Sakinah Arifin
(603) 2708 8212
sakinah@ram.com.my