[RAM] RAM Ratings assigns preliminary enhanced AAA(s) rating to Kami Builders' proposed RM90 million Tranche 1 SRI Sukuk Murabahah

RAM Ratings has assigned a preliminary enhanced rating of AAA(s)/Stable to Kami Builders Sdn Bhd’s (KBSB or the Company) proposed RM90 mil Tranche 1 SRI Sukuk Murabahah (Tranche 1) under its RM300 million ASEAN Sustainability SRI Sukuk Programme. Tranche 1 will be fully secured by a standby letter of credit (SBLC) to be issued by UBS Switzerland AG (UBS). Accordingly, the rating solely reflects UBS’s credit strength, which RAM has assessed as AAA/Stable(pi).

Kami Builders is a wholly owned subsidiary of Wawasan QI Properties Sdn Bhd (WQIP) and serves as WQIP’s property investment and development arm. Proceeds from Tranche 1 will be partly used to fund the construction of a new university campus, estimated at RM150 mil in Ipoh, Perak. The balance of construction cost will be funded through advances from WQIP.

Upon completion, the campus will be leased to Global Integrated Teaching Associates (GITA), the operator of Quest International University (QIU or the University), for a minimum tenure of 20 years. GITA is owned by WQIP (65%), Dato’ Sri Vijay Eswaran (15%), Dato’ Dr R. Subramaniam (10%) and the Perak state government (10%). Except for the latter two, the shareholders are part of the broader QI Group, a diversified group of companies involved in global direct selling (MLM), real estate, hospitality and retail.

RAM’s assessment of the SBLC focuses on the extent to which the credit risk of Tranche 1 is effectively substituted by that of the SBLC provider, as well as any residual risks that could impair the timely and full repayment to sukukholders. As part of our enhanced due diligence, we engaged with UBS as SBLC provider, Adnan, Sundra & Low as the transaction legal counsel, Public Investment Bank as principal advisor and lead arranger, and the project sponsors including QI Holdings. QI Holdings also appointed Homburger AG, a leading Swiss law firm to provide an independent opinion on the validity and enforceability of the SBLC under Swiss jurisdiction.

Based on our review of the SBLC terms, the relevant documentations and legal opinions, and discussions with the transaction parties, we consider the SBLC to be an effective and binding credit enhancement.

While the rated transaction is not associated with QI Group’s MLM operations which had faced regulatory scrutiny and controversies in certain foreign jurisdictions, we have explicitly considered these matters as part of RAM’s enhanced due diligence. We recognize that while reputational risks affecting the Group could indirectly impact operations, they have limited direct impact on the performance of the rated obligations. Nevertheless, any adverse regulatory developments may still affect stakeholder perceptions and governance sensitivities, such as the willingness of the SBLC provider to continue extending support. We will monitor such risks and may reflect them in future rating actions if they materially affect the rated transaction.


Analytical contacts
Amira Shamsul
(603) 2708 8242
syahira@ram.com.my 

Thong Mun Wai 
(603) 2708 8255
munwai@ram.com.my

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