[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 Indera Persada’s solid debt-servicing ability supported by stable concession-backed Availability Charges (ACs) earmarked for bond repayments and taxes, structural protections that limit cash flow leakage, and projected debt coverages that remain in line with rating thresholds. AC collections during the review period were generally timely, reinforcing the Company’s debt service resilience and liquidity. Under RAM’s stressed analysis, the Company is expected to maintain consolidated projected debt service coverage ratios (DSCRs) of at least 1.50 times for the Serial Bonds and MTNs, consistent with the threshold required for an AA1-rated low-complexity private finance initiative or public-private partnership project.

Upon completion of Public Works Department’s (PWD) training centre (the Project), Indera Persada is entitled to receive monthly Maintenance Service Charges (MSCs), in addition to ACs. MSCs are intended to fund operating and maintenance (O&M) obligations for the Project and are separate from ACs, which are reserved for debt service and taxes. While debt servicing remains unaffected from operating cash flow pressures, Indera Persada’s operating performance weakened in 2025 and year-to-date 2026 as MSCs deductions rose to 17% in 2025 and to about 19% in 4M 2-26, mainly due to rental, IT, staffing and rectification costs.

O&M costs have continued to exceed net MSC receipts, increasing reliance on shareholder support from Digistar Corporation Berhad (Digistar) – Indera Persada’s 70% ultimate parent – particularly if maintenance performance does not improve or cost pressures remain elevated. That said, the higher cost base is driven mainly by personnel expenses, partly reflecting government’s minimum wage revision, rather than direct asset maintenance costs, which continue to be adequately met by MSCs received.

Importantly, MSC deductions have remained below the 25% threshold for three consecutive months that could trigger an Event of Default. Management is pursuing recovery of disputed deduction amounts and operational measures to reduce further deductions. While a revision of MSC rates would improve additional operating headroom, our analysis does not assume any uplift. Notwithstanding these challenges, bondholder protections remain intact as AC receipts are ring-fenced for debt service and tax obligations and cannot be used to fund O&M costs, thereby insulating debt repayment capacity from operating performance pressures.

As with other concession-backed transactions, Indera Persada remains exposed to single-project concentration and regulatory risks. The MTNs benefit from a corporate guarantee from Digistar; however, credit benefit is limited by Digistar’s own financial profile and is therefore viewed neutral from a rating perspective. Rating pressure could emerge if prolonged payment delays, weaker maintenance performance, excessive distributions or reduced shareholder capacity and incentive to support were to suppress projected DSCRs below the 1.50 times threshold or materially weaken the transaction’s liquidity buffer.

 

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