RAM Ratings affirms Ideal Water Resources' Tranche 2 AA1 Sukuk rating

RAM Ratings has affirmed the AA1/Stable rating of the RM255 mil Tranche 2 Sukuk (2025/2034) (Tranche 2 Sukuk) issued under Ideal Water Resources Sdn Bhd's (IWR) Sukuk Murabahah Programme of up to RM1 bil (2023/-). The reaffirmation reflects the transaction's resilient cash flow characteristics, supported by predictable concession-derived receipts and adequate finance service coverage under RAM's stressed assumptions.

IWR is a funding conduit within the Puncak Niaga group and has no standalone operations. Its capacity to meet obligations under the Tranche 2 Sukuk relies fully on upstream cashflows from TRIplc Ventures Sdn Bhd. TVSB, in turn, receives concession payments from University Teknologi MARA (UiTM), which it first utilises for its operational needs before upstreaming residual funds to IWR via intra-group debt repayments and pre-agreed dividend distributions. In our view, this cash flow structures supports stable, timely sukuk servicing, although it also links IWR's credit quality closely to TVSB's operating performance and the continuity of concession payments.

Structural protections and covenant package continue to support the transaction's credit profile. Although IWR and TVSB are separate legal entities, the financing structure contractually aligns their cash flows and obligations. As such, we consider them as a single economic entity from a credit perspective. As TVSB's debt is fully held by IWR, credit subordination risk does not arise.

In 2025, TVSB received concession payments within RAM's three-month delay sensitivity threshold. Operational performance also remained above the concession agreement's 93% service requirement, resulting in only negligible deductions. Under RAM's sensitised analysis, the Tranche 2 Sukuk is projected to record minimum and average post-distribution finance service coverage ratios (including cash balances) of 1.53 times and 2.31 times, respecti