RAM Ratings has assigned a short-term rating of P1 to Pengurusan Air SPV Berhad's (PASB or the Company) proposed Islamic Commercial Papers Programme of up to RM2 bil in nominal value (2022/2029) (ICP Programme). Meanwhile, the AAA/Stable rating for its RM20 bil Islamic Medium-Term Notes (IMTN) Programme (2009/2039) was reaffirmed in February 2022. 

The ratings are premised on our view that PASB will continue to derive substantial financial flexibility from the Government of Malaysia via Minister of Finance (Incorporated), its ultimate holding company. PASB is the financing conduit and 100%-owned subsidiary of Pengurusan Aset Air Berhad (PAAB or the Group), the national water asset company mandated to facilitate the water restructuring exercise in Peninsular Malaysia and the Federal Territory of Labuan under the Water Services Industry Act 2006 (WSIA). PAAB is also tasked with developing and financing water infrastructure in these areas.

Proceeds from the proposed ICP Programme will be used to develop water infrastructure and to fund PAAB's shariah-compliant capital expenditure, short-term working capital and general corporate purposes. RAM Sustainability Sdn Bhd has assigned the respective Environmental Benefit (EB) and Social Benefit (SB) ratings to PASB's green and social projects under the Company's Sustainability Sukuk Framework. Therefore, the ICP Programme may also be issued as a sustainability sukuk.

An irrevocable and unconditional Purchase Undertaking Deed provided by PAAB under the transaction structures gives sukukholders recourse to the Group. As such, the ratings of the sukuk reflects PAAB's credit risks. Both PAAB and PASB are accordingly viewed in aggregate from a credit perspective. The ratings are further based on the Group's strategic role as the custodian of national water assets and key facilitator of the water industry's restructuring. RAM's rating methodology for government-linked entities considers PAAB a ''dependent'' entity in view.