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RAM Ratings affirms Widad Concession’s sukuk at AA1
Published on 30 Dec 2025.
RAM Ratings has affirmed the AA1/Stable rating on Widad Concession Sdn Bhd’s (WCSB or the Company) RM310 mil Sukuk Wakalah Facility (2022/2034). The affirmation is premised on the strong debt coverage metrics, reflecting the transaction’s stable and predictable cash flows that are underpinned by concession-backed payments from its sister company, YBK Usahasama Sdn Bhd (YBKU), through Universiti Teknologi MARA (UiTM). The rating also incorporates the covenants and restrictions imposed under the sukuk.
WCSB, a wholly owned subsidiary of Widad Group Berhad (WGB), was set up to acquire a public-private partnership or project finance initiative project concession held by YBKU. YBKU holds a 23-year concession to develop and maintain the Universiti Teknologi MARA (UiTM) campus in Jasin, Melaka. WCSB does not have independent business operations and relies entirely on cashflows from YBKU, channelled through profit and principal repayment on murabahah stocks and dividends, to service the sukuk obligations.
YBKU registered strong maintenance performance in 2024 and 8M 2025, incurring minimal maintenance charge deductions and receiving prompt payments from UiTM. RAM’s stressed analysis projects WCSB’s consolidated finance service coverage ratios (FSCRs) to remain above the 1.5 times threshold required for an AA1-rated low-complexity private finance initiative or public-private partnership transaction. The transaction terms impose strict restrictions on all business activities, indebtedness, shareholders distributions and expenses. We note that since issuing its sukuk in 2022, the Company has consistently paid higher taxes than budgeted, which necessitates sukuk holders’ approval for any additional expenditure spend beyond the budgeted amount initially presented.
While WCSB has commenced dividend distributions to shareholders, with a total of RM20 mil already paid in April and October 2025, any sizeable future distribution could erode liquidity buffers and weaken credit metrics. In this regard, we expect the management to carefully manage future dividend payments and balance the higher-than-budgeted tax expenses whilst maintaining the appropriate FSCR profile that remains commensurate with the AA1 sukuk rating.
The rating is moderated by the transaction’s structural complexity, involving multiple related parties, and the risk of concession termination. While remote, the Government of Malaysia does not have a direct obligation to WCSB’s sukuk holders in the event of termination. The sukuk holders have financial recourse through a corporate guarantee and cash deficiency undertaking from WGB in adverse circumstances, though this support is precluded from our rating assessment.
Analytical contacts
Hani Hamizah Nor Hashim
(603) 2708 8240
hani@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
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