AmBank neutral on water sector despite ratings downgrade
KUALA LUMPUR, April 7 — AmBank has maintained its neutral call on the water sector following Malaysian Rating Corp’s (MARC) ratings downgrade to Selangor water bonds yesterday.
The bank said the latest development in the three-year Selangor water saga confirmed that renewed attempts to find closure to the impasse will remain challenging.
Ambank pointed out that there were no takers for the state government’s RM5.7 billion offer for water concessionaires’ assets that was made in December last year.
“This has been further exacerbated by a series of lawsuits by the various water entities against one another — while the status of Syabas’ (Syarikat Bekalan Air Selangor) protracted request for a tariff hike remains somewhat unresolved,” it said in a note yesterday.
AmBank nonetheless maintained its neutral call on the sector and a “hold” rating on Puncak Niaga Holdings Bhd (PNHB) — parent company to water distributor Syabas and Puncak Niaga Sdn Bhd (PNSB) — and Kumpulan Perangsang Selangor Bhd (KPS), 55 per cent owner of Konsortium ABASS.
MARC yesterday announced further downgrades to 12 Selangor water bonds, with only Viable Chip Sdn Bhd’s bank-guaranteed Al-Bai’ Bithaman Ajil Islamic Debt Securities maintained. The affected issues include PNHB, KPS and Syarikat Pengeluar Air Selangor (Splash).
RAM Ratings had on March 23 maintained its negative rating watch on Selangor water bonds at BBB3.
The bond issues include Splash’s RM1.4 billion Al-Bai’ Bithaman Ajil Islamic Debt Securities, Destinasi Tegu’s RM395 million secured bonds and Sungai Harmoni’s RM90 million redeemable loan stocks.
