Published on 22 Sep 2023.
RAM Ratings has affirmed the AAA/Stable rating of the RM555 mil Senior Notes under Glacier Assets Berhad’s (the Issuer) RM800 mil Asset-Backed Medium-Term Notes Facility.
The transaction monetises the balance of 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 Gamuda Water Sdn Bhd (the Originator).
Established as a sole-purpose funding vehicle, Glacier’s cashflow receipts stem solely from scheduled and fixed annual instalments payable by SPLASH under the TSA (Annual Instalments). The Issuer has ultimate recourse to Air Selangor – SPLASH’s parent company – that undertakes to pay any missed Annual Instalments, including default interest, upon written demand.
The rating affirmation reflects the credit profile of Air Selangor (click here for more information) in its role as the Guarantor for the Annual Instalments. The largest water operator in Malaysia, Air Selangor is the sole licence holder for water treatment and distribution services in Selangor and the Federal Territories of Kuala Lumpur and Putrajaya. It plays a critical public policy role for the Selangor state government. The highly anticipated support from the state government in times of financial distress underpins our view that the Guarantor’s credit strength mirrors that of the state. Selangor’s State Implicit Strength (SIS) is assessed to be robust, the highest ranking in RAM’s SIS Framework.
Glacier’s receipt of Annual Instalments has been timely to date. As at end-June 2023, RM17.04 mil of cash in the transaction’s Settlement Account and the remaining RM464.31 mil of Annual Instalments to be received are more than sufficient to cover coupon and principal obligations under the outstanding Senior Notes. Based on the designated accounts report as at the same date, actual transaction expenses incurred were largely in line with the levels estimated.
The transaction prohibits coupon and principal payment under the unrated Junior Notes until all Senior Notes have been fully redeemed. Designated accounts are prefunded with cash upfront via issue proceeds to cover the Issuer’s transaction expenses during the tenure of the Senior Notes and early redemption premiums on the notes, if any.
Liew Kar Ling
(603) 3385 2586
Tan Han Nee
(603) 3385 2529
(603) 3385 2500
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Ratings on Glacier Assets Berhad