[MARC] MARC Ratings affirms AA-IS rating on ACSB’s RM535.0 million Sukuk Murabahah Programme

MARC Ratings has affirmed its AA-IS rating on AZRB Capital Sdn Bhd’s (ACSB) RM535.0 million Islamic Medium-Term Notes (Sukuk Murabahah) Programme with a stable outlook. Currently, RM350.0 million is outstanding under the programme.

ACSB is a funding vehicle for Ahmad Zaki Resources Berhad (AZRB). The proceeds of RM535.0 million from issuances under the programme have been used to subscribe to the Redeemable Convertible Preference Shares (RCPS-i) of wholly-owned subsidiary Peninsular Medical Sdn Bhd (PMSB). PMSB is the concessionaire for the Sultan Ahmad Shah Medical Centre @IIUM, which it built and continues to maintain. ACSB receives monthly maintenance charges (MC) and availability payments (AP) from the government, which are the primary sources of debt servicing.

The rating affirmation reflects the strong credit profile of the Malaysian government, the sole paymaster under the concession agreement, alongside the structured sukuk’s fund flows which prioritise payments into ACSB’s designated accounts and strict cash retention via the Finance Service Reserve Account (FSRA), as well as the government’s track record of prompt monthly payments under the concession. Since the start of the concession, payments from the government have been timely and consistent, largely reducing payment default risk and reinforcing the overall credit stability of the sukuk structure. MARC Ratings notes that while fund flows have remained robust, the cash flow buffer remains sensitive to any unexpected rise in maintenance costs. A revision of the MC rate that would strengthen cash flows is currently under review and this is expected to be concluded by end-2025. The company has repaid the RM85.0 million sukuk tranche due in December 2024. The next repayment is due in December 2026, with the FSRA required to be fully funded by June 2026, allowing for time to rebuild cash reserves.

PMSB receives combined monthly AP and MC payments of nearly RM10.0 million for the hospital’s construction and maintenance. In January 2025, PMSB completed additional capital works — including the construction of a fertility centre, psychiatric ward, and paediatric intensive care units — for which a Certificate of Practical Completion was issued on 20 January 2025. PMSB received progress billing for the construction work done. Separately, the AP rate has been adjusted upwards by 7.0% in May 2025, in line with a periodic revision under the concession. Maintenance services remain outsourced to longstanding contractor Advance Pact Sdn Bhd. Aside from a 5.2% deduction in February 2025 due to its main contractor’s minor non-compliance with key performance indicators, which has since been rectified, there have been no significant performance breaches affecting MC receipts.

Vanessa Leong, +603-2717 2931/ xinyue@marc.com.my
Chong Wat Son, +603-2717 2929/ watson@marc.com.my
Taufiq Kamal, +603-2717 2951/ taufiq@marc.com.my