Published: Wednesday July 18, 2012 MYT 4:11:00 PM
RAM assigns AA3 rating to Edaran's RM750m Sukuk
KUALA LUMPUR: RAM Rating Services Bhd assigned a preliminary AA3 rating, with a stable outlook, to Edaran SWM Sdn Bhd's proposed initial issuance of RM750mil from its proposed Islamic medium-term notes programme (IMTN) of up to RM1bil in nominal value (2012/2032).
It said on Wednesday Edaran is the main sub-contractor to its sister company, SWM Environment Sdn Bhd (SWME), which is the concessionaire for collection services and public-cleansing management services in Johor, Negeri Sembilan and Melaka.
Proceeds from the proposed Sukuk would be used to buy relevant assets to provide the services ranging from collection of solid waste, while public cleansing services refer to the cleaning of public drains, grass cutting, street sweeping and the cleansing of public areas.
Edaran will have exclusive rights over the provision of the services in a significant number of areas allocated to the concessionaire.
Edaran will receive fees that are fixed in tandem with SWME's fees under the concession agreement.
"Notably, demand for the services is tied to household growth, which has been stable, albeit gradual.
"We derive comfort from the management's experience in providing the services since 1997. Operational risks are minimal given the straightforward nature of the Services, together with the undemanding operating requirements that Edaran has to comply with," it said.