RAM Ratings affirms UniTapah’s AAA/Stable issue rating

Published on 26 Apr 2024.

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RAM Ratings has affirmed the AAA/Stable rating of UniTapah Sdn Bhd’s (the Company) Sukuk Murabahah of up to RM600 mil (2014/2035) (the Sukuk) in view of the Company’s steady cashflow and robust debt coverage. We expect the Company’s debt-servicing capacity to stay strong, underpinned by predictable and prompt concession payments from Universiti Teknologi MARA (UiTM) and its continued good performance in campus maintenance.

UniTapah was tasked with developing and maintaining the UiTM campus in Tapah, Perak under a 23-year concession. In accordance with the concession agreement, the Company received fixed monthly payments of availability charges and maintenance charges in a timely manner throughout 2023. UniTapah’s maintenance track record has been excellent and penalties incurred for underperformance have been negligible over the last few years. Maintenance is undertaken externally through Everfine FMS Sdn Bhd, a subsidiary of listed GFM Services Berhad.

Notwithstanding assumptions of a delay in the receipt of concession payments, zero maintenance margins and lower annual interest income (on cash reserves) in our stressed scenario, the Company’s finance service coverage ratios (FSCRs, with cash balances) are expected to remain robust at above 1.80 times – levels that will comfortably anchor the rating.

The sukukholders’ interests are safeguarded by the transaction’s financing structure and restrictive covenants which prohibit distributions to shareholders, and the defined administration of designated accounts to minimise leakages. As a result, any cashflow outperformance relative to our stressed analysis adds to its cash reserves, contributing to better debt repayment capacity, as measured by FSCRs. Counterparty risk is deemed low as the Government of Malaysia, via UiTM, is the ultimate obligor of concession payments.

As with most concession-based transactions, UniTapah is exposed to concession termination risk. While the compensation mechanism is spelt out, risk arises from potential delays in receiving reimbursements. In any case, termination is viewed as remote, considering the Company’s good operational history and the non-complex nature of the maintenance work. 


Analytical contacts
Hani Hamizah Nor Hashim 
(603) 3385 2575

Davinder Kaur Gill
(603) 3385 2525

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 2024 by RAM Rating Services Berhad

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Ratings on UniTapah Sdn Bhd