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RAM Ratings affirms Sasaran Etika
Published on 13 May 2025.
RAM Ratings has affirmed the AA1/Stable rating of Sasaran Etika Sdn Bhd’s (the Company) RM220 mil Fixed-Rate Serial Bonds (2012/2027), reflecting the steady concession-based earnings that continue to anchor the bonds’ stable debt coverage and credit metrics.
Sasaran Etika holds a 221/2-year concession for the construction and maintenance of residential colleges to accommodate 5,000 students at International Islamic University Malaysia (IIUM) in Kuantan, Pahang. The Company achieved healthy debt coverage for the review period with debt service coverage ratios (DSCRs) of above 1.50 times, commensurate with the AA1 rating.
We note that there have been sizeable past distributions to shareholders in the past. While fulfilling the covenanted thresholds, it has nonetheless led to thinner cash reserves and available liquidity buffers to meet future scheduled payments. To this end, we take comfort from Sasaran Etika’s expressed intent to preserve its debt coverage profile required to maintain the issue rating.
Concession payments in FY Dec 2024 were timely, coming in within a 27-day average. The Company faces minimal counterparty risk as the Government of Malaysia is the ultimate payment counterparty. Penalties for maintenance underperformance have also been negligible, given Sasaran Etika’s excellent track record over the last several years and the generally non-complex nature of asset management services – undertaken by through its sister company Nadi Cergas Urus Harta Sdn Bhd – for IIUM.
Sasaran Etika is entitled to compensation if its concession agreement is terminated, the risk of which is deemed remote. 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).
Analytical contacts
Lai Jing Wei
(603) 2708 8239
jingwei@ram.com.my
Davinder Kaur Gill
(603) 2708 8220
davinder@ram.com.my
Media contact
Sakinah Arifin
(603) 2708 8212
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
© Copyright 2025 by RAM Rating Services Berhad
