RAM Ratings affirms Sasaran Etika’s AA1/Stable issue rating

Published on 26 May 2023.

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RAM Ratings has affirmed the AA1/Stable rating of Sasaran Etika Sdn Bhd’s (the Company) RM220 mil Fixed-Rate Serial Bonds (2012/2027). Sustained by steady concession-based cash earnings and reserves, the bonds’ debt coverage and credit metrics remain robust. 

Sasaran Etika holds a 221/2-year concession for the design, construction, completion and maintenance of residential colleges to accommodate 5,000 students of International Islamic University Malaysia (IIUM) in Kuantan, Pahang. The Company receives monthly cash flows for having built the residential colleges as well as for the maintenance and upkeep of these facilities.

Sasaran Etika’s actual debt coverage for the review period was in line with our stressed projection, supported by timely concession payments. Its DSCRs1 were satisfactory for the AA1 rating. We expect these levels to be maintained throughout the remaining tenure of the bonds.

Timely receipt of Availability Charges from IIUM is crucial as they are the sole source of funds for the repayment of the bonds. Despite the occasional delay, payments have been timely, coming in within 21 days of invoice receipt on average in 2022. Sasaran Etika faces minimal counterparty risk as the Government of Malaysia, via the Ministry of Higher Education, is the ultimate obligor of concession payments.

Given the Company’s notable maintenance track record over the last few years, penalties for underperformance have been negligible. Maintenance is undertaken externally through sister company Nadi Cergas Urus Harta Sdn Bhd. Sasaran Etika’s asset management services for IIUM are generally deemed non-complex.

While concession agreement (CA) termination risk is considered remote, Sasaran Etika is entitled to compensation if the Company’s CA is terminated. As with most concession-related companies, Sasaran Etika is exposed to single-project risk, where a force majeure or major operational failure may disrupt its entire operations (usually with no provisions for compensation).

1 Debt service coverage ratios (DSCR) are calculated on a 12-month rolling basis, semi-annually on each payment date, and exclude the final repayment period.


Analytical contacts
Julian Chan
(603) 3385 2486

Davinder Kaur Gill
(603) 3385 2525


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
© Copyright 2023 by RAM Rating Services Berhad

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