RAM Ratings reaffirms rating of Swirl Assets’ Senior Notes backed by receivables due from Air Selangor

Published on 29 Sep 2021.

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RAM Ratings has reaffirmed the AAA/Stable rating of the RM595 mil Senior Notes under Swirl Assets Berhad’s (the Issuer) RM700 mil Asset-Backed Medium-Term Notes Facility. The Senior Notes rank above the unrated Junior Notes (collectively, the Notes) under the facility. 

The transaction is structured to monetise the balance of receivables due under the Share Purchase Agreement (SPA) dated 28 September 2018 between Syarikat Pengeluar Air Selangor Holdings Bhd (SPLASH Holdings or the Originator) and Pengurusan Air Selangor Sdn Bhd (Air Selangor or the Obligor). The SPA formalises the Obligor’s purchase of the Originator’s entire stake in Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (SPLASH). 

The reaffirmation of the rating reflects Air Selangor’s credit profile which hinges on its critical public policy role and importance to the Selangor state government (SSG). Air Selangor – Malaysia’s largest water operator – is the sole licence holder of water supply and distribution services in Selangor and the Federal Territories of Kuala Lumpur and Putrajaya. Highly anticipated support from the SSG in times of financial distress underpins our view that the Obligor’s credit strength mirrors that of the state. 

As the SPA forms a key part of the resolution of long-drawn negotiations on Selangor’s water restructuring exercise, Air Selangor is viewed as having strong incentives to meet obligations under the SPA and therefore unlikely to reprioritise these obligations vis-à-vis other payment commitments. Swirl duly received the scheduled annual payment from Air Selangor on 24 April 2021. The designated accounts report as at 30 June 2021 indicates that actual transaction expenses incurred were largely in line with the levels estimated. 

The transaction includes a pre-funded maintenance account for the Issuer’s annual expenses over the life of the Notes and a pre-funded Early Redemption Account to cover early redemption premiums on the Senior Notes, if any. Prepayment terms of the Senior Notes, which mirror the terms of the Obligor’s early redemption option under the SPA, minimise potential negative carry risk. The five-month difference between the due dates of the annual instalments (starting April 2021) and payment dates of the Senior Notes (starting September 2021) provides a buffer against any potential delay in payments from the Obligor. Funds in the Settlement Account cannot be used to make payments in respect of the Junior Notes until all Senior Notes have been fully redeemed. This mitigates any cashflow leakage. The rating does not reflect the prepayment risk on the Notes. 


Analytical contacts
Joel Thum
(603) 3385 2517

Tan Han Nee
(603) 3385 2529


The credit rating is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment on the security’s market price or its suitability for a particular investor, nor does it involve any audit by RAM Ratings. The credit rating also does not reflect the legality and enforceability of financial obligations.

RAM Ratings receives compensation for its rating services, normally paid by the issuers of such securities or the rated entity, and sometimes third parties participating in marketing the securities, insurers, guarantors, other obligors, underwriters, etc. The receipt of this compensation has no influence on RAM Ratings’ credit opinions or other analytical processes. In all instances, RAM Ratings is committed to preserving the objectivity, integrity and independence of its ratings. Rating fees are communicated to clients prior to the issuance of rating opinions. While RAM Ratings reserves the right to disseminate the ratings, it receives no payment for doing so, except for subscriptions to its publications.

Similarly, the disclaimers above also apply to RAM Ratings’ credit-related analyses and commentaries, where relevant.

Published by RAM Rating Services Berhad
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