RAM Ratings has affirmed the respective AAA/Stable and P1 ratings of Pengurusan Air Selangor Sdn Bhd's (Air Selangor or the Company) Islamic Medium-Term Notes Programme (2020/-) and Islamic Commercial Papers Programme (2020/2027) (collectively, the Sukuk, with a combined limit of RM20 bil). The programme limit was raised from RM10 bil previously to support Air Selangor's anticipated capital commitments.

The Company's sukuk ratings are considered equivalent to the creditworthiness of its ultimate parent, the Selangor state government. This reflects our expectations that extraordinary financial support from the State government is 'almost certain', given the Company's critical role in supplying treated water throughout Klang Valley. Past and ongoing support includes loans, grants and transfers of water infrastructure. 

Selangor's State Implicit Strength (SIS) is assessed to be 'superior', the highest category under RAM's SIS Framework. With consistent fiscal surpluses since 2020, a strong net cash position and very low public debt, the state government is financially sound and has the capacity to provide timely support to Air Selangor in the event of a temporary liquidity need. 

Independently of that, Air Selangor maintains a healthy liquidity profile with cash reserves of RM1.8 bil as at end-March 2025, comfortably covering short-term debts of RM775 mil. Its revenue rose to RM2.9 bil in 2024 (2023: RM2.5 bil) in tandem with higher tariffs in February the same year. A recently announced rate hike, effective 1 September 2025, will help narrow the gap between the Company's income and sizeable depreciation, leasing and financing costs. Although Air Selangor is expected to remain loss-making in the medium term due to still low water tariffs, the rate increase demonstrates the regulator's commitment and industry's concerted efforts toward achieving long-term sustainability of water operations.

From 2025 to 2029, the Company expects to incur annual capital expen