RAM Ratings affirms rating of Starbright Capital’s water receivables-backed notes

Published on 22 Sep 2023.

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RAM Ratings has affirmed the AAA/Stable rating of the RM665 mil Medium-Term Notes (the Notes) under Starbright Capital Berhad’s (the Issuer) RM700 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 Sungai Harmoni Sdn Bhd (the Originator). 

Established as a sole-purpose funding vehicle, Starbright’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.

Starbright’s receipt of Annual Instalments has been timely to date. As at end-June 2023, RM100.38 mil of cash in the transaction’s Settlement Account and the remaining RM511.71 mil of outstanding Annual Instalments to be received are more than sufficient to cover coupon and principal obligations under the outstanding 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 allows the Issuer to use the residual balance in the Settlement Account, after meeting transaction obligations, to satisfy the deferred purchase price of the receivables on each anniversary of the issue date. To address cashflow deficit risk in the unlikely event of a delay in Annual Instalments, RM1.0 mil has been set aside as a contingent buffer to meet principal due on the Notes. 


Analytical contacts
Liew Kar Ling
(603) 3385 2586

Tan Han Nee
(603) 3385 2529

Media contact
Sakinah Arifin
(603) 3385 2500


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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