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RAM Ratings affirms rating of Swirl Assets’ Senior Notes backed by receivables due from Air Selangor
Published on 18 Oct 2024.
RAM Ratings has affirmed the AAA/Stable rating of the RM595 million Senior Notes issued under Swirl Assets Berhad’s (the Issuer) RM700 million Asset-Backed Medium-Term Notes Facility.
This transaction monetises outstanding receivables due under the Share Purchase Agreement (SPA) between Syarikat Pengeluar Air Selangor Holdings Berhad (SPLASH Holdings or the Originator) and Pengurusan Air Selangor Sdn Bhd (Air Selangor or the Obligor). The SPA governs Air Selangor’s acquisition of SPLASH Holdings’ entire stake in Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (SPLASH).
A special-purpose funding entity, Swirl Assets relies solely on fixed annual instalments payable by Air Selangor under the SPA (Annual Instalments) to meet its obligations under the Senior Notes.
The affirmation of the Senior Notes rating reflects Air Selangor’s creditworthiness in its role as the Obligor (click here for more information). As Malaysia’s largest water operator, Air Selangor holds the exclusive licence for water treatment and distribution in Selangor, Kuala Lumpur and Putrajaya. Its critical role in delivering essential services underlines our expectation of strong state support, particularly in challenging financial conditions. In our view, Air Selangor’s credit strength is closely aligned with the financial standing of the state of Selangor, which has a robust State Implicit Strength (SIS) – the highest classification in RAM’s SIS Framework.
To date, Swirl Assets has received Annual Instalments on schedule. As of end-June 2024, RM118.40 million in cash held in the Settlement Account, together with RM326.81 million in future instalments due, were more than adequate to cover all remaining coupon and principal payments on the Senior Notes. The designated accounts report as at the same date confirmed that actual transaction expenses were largely in line with projections.
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, mitigating any potential cashflow leakage. The transaction ensures that designated accounts are prefunded with issue proceeds to cover any transaction expenses throughout the tenure of the Senior Notes as well as early redemption premiums, if applicable.
Analytical contacts
Darrel Tiang
(603) 3385 2531
darrel@ram.com.my
Tan Han Nee
(603) 3385 2529
hannee@ram.com.my
Media contact
Sakinah Arifin
(603) 3385 2500
sakinah@ram.com.my
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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