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RAM Ratings affirms Pengurusan Air SPV’s AAA/P1 sukuk ratings
Published on 19 Dec 2025.
RAM Ratings has affirmed the AAA/Stable rating of Pengurusan Air SPV Berhad’s (PASB) RM20 bil Islamic Medium-Term Notes Programme and the P1 rating of its RM2 bil Islamic Commercial Papers (ICP) Programme. The ICP Programme may also be issued as a sustainability sukuk.
The rating affirmation reflects PASB’s continued strategic benefit from its parent Pengurusan Aset Air Berhad (PAAB or the Group), which serves as Malaysia’s national water asset custodian. This, coupled with PAAB’s strong institutional ties with the Government of Malaysia, underpin the expectation of ‘almost certain’ extraordinary support from the Minister of Finance (Incorporated) (MoF Inc.), PASB’s ultimate holding company, if required. Sukukholders have recourse to PAAB by virtue of an irrevocable and unconditional Purchase Undertaking Deed. From a credit perspective, PAAB and PASB are assessed collectively, with the sukuk ratings anchored by PAAB’s credit profile. Given the Group’s unique public policy function of funding and developing the country’s water infrastructure, its management direction is subject to significant oversight from MoF Inc. including board representation and close monitoring, with demonstrated past support.
In FY Dec 2024, PAAB’s revenue rose 11% y-o-y to RM1.22 bil, mainly due to higher lease income from Selangor’s Langat 2 project and new water assets in Johor, supported by a tariff revision in February 2024. Profit before tax climbed 6%, moderated by a 20.5% decline in other income and a 4.8% increase in finance costs. With annualised revenue for 1H 2025 up by 4.5%, PAAB’s earnings are expected to strengthen further, as PAAB progressively completes its RM11 bil project pipeline, most of which is slated for completion by 2031. Lease collections are projected to improve after the expiry of the lease payment moratorium for Kedah and Perlis’ water operators in March 2026, further aided by the August 2025 tariff revision.
As of end-June 2025, PAAB’s total debt increased to a substantial RM29.2 bil, reflecting the capital-intensive nature of its operations. Gearing, however, eased to 10.3 times (end-December 2024: 11.1 times). Our credit assessment places greater emphasis on the Group’s liquidity profile, where the interest coverage ratio consistently averaged 1.20 times over the past five years. This is supported by a well-structured debt repayment profile, strong government support and reliable access to the sukuk market for refinancing and asset development.
Analytical contacts
Amira Shamsul, CFA
(603) 2708 8242
syahira@ram.com.my
Hani Hamizah Nor Hashim
(603) 2708 8240
hani@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
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