[RAM] RAM Ratings affirms AA1 rating of Indera Persada's rated bonds

RAM Ratings has affirmed the AA₁/Stable rating of Indera Persada Sdn Bhd’s (the Company) RM280 million Fixed Rate Serial Bonds (2013/2028) and RM68 million Medium Term Notes (MTNs) (2023/2031). 

The affirmation is anchored on predictable and timely concession-backed project cashflows and covenants imposed under the transaction. Indera Persada’s consolidated debt coverage metrics for the Serial Bonds and MTNs, as measured by its debt service coverage ratios (DSCRs) of at least 1.50 times remain robust and aligned to the threshold required for a low-complexity private finance initiative or public-private partnership project. 

Following the completion of the Public Works Department’s (PWD) training centre (the Project) – for which Indera Persada holds the concession – the Company is entitled to receive monthly Availability Charges (ACs) and Maintenance Service Charges (MSCs), that are the sole source of bond repayments. Structural covenants further support the Company’s debt repayment capacity by minimising potential cashflow leakages and limiting its activities, indebtedness and distribution to shareholders. In 2024, ACs and MSCs were received within an average of 19 days and 18 days, respectively, well below RAM’s 90-day stressed assumption.

As in prior years, Indera Persada’s operations and maintenance (O&M) expenses continue to exceed MSCs receipts. The difference is borne by advances from Digistar Corporation Berhad, which has a 70% stake in the Company. This arrangement is atypical of project financing transactions, but bondholders’ interests remain protected from a cashflow and credit perspective, given that O&M-related outflows are restricted to MSCs receipts whilst ACs are earmarked for debt servicing and taxes. Hence, these funds cannot be used for any other purposes. Additionally, as the transaction DSCR computation excludes MSCs inflows and outflows, it is not impacted by the rising costs.

While non-performance risk at Indera Persada has remained low in the past, MSCs deductions jumped to a 9.9% average of the concession receipts in the first five months of 2025, from a 1.4% average in 2024. Deductions were attributable to non-payment of past rental charges and a lower staff count. Fortunately, the Company’s key performance indicator scores stayed within the thresholds to avoid any risk of an event of default under the concession. High costs coupled with rising deductions, if unaddressed, will result in a broadening reliance on Digistar to meet expenses. As such, any amicable solution and recovery of deductions will be viewed positively from a credit standpoint. 

As with all concession-backed transactions, Indera Persada remains exposed to single-project and regulatory risks. Compensation prescribed in the concession agreement encompasses debt incurred to fund construction costs while the MTNs are secured against a corporate guarantee from Digistar. Although the guarantee ensures better alignment of stakeholder interests, its effectiveness could be constrained by Digistar’s financial health. The guarantee is neutral from a credit and rating perspective. 


Analytical contacts
Nur Hadhirah Binti Bahrom 
(603) 2708 8207
hadhirah@ram.com.my

Davinder Kaur Gill
(603) 2708 8220
davinder@ram.com.my

Media contact
Sakinah Arifin
(603) 2708 8212
sakinah@ram.com.my