International Islamic University Malaysia
KUALA LUMPUR: Two private-finance-initiative (PFI) concessions Sasaran Etika Sdn Bhd and UniTapah Sdn Bhd are not immediately impacted by the cuts in government funding for public universities, says RAM Rating Services.
The rating agency does not expect the cuts in government funding for public universities to impact the PFI concessions with public universities as the paymasters.
“Although the International Islamic University Malaysia (IIUM) and Universiti Teknologi MARA (UiTM) are the paymasters for two of our rated concession companies, both concessionaires are deemed to face minimal counterparty risk given that the government of Malaysia is the ultimate obligor, with availability charges forming part of the government’s budget,” it said.
“More importantly, the availability charges are separate from the universities’ operating expenditure budget and usage of funds from the government is governed by strict internal procedures. Hence, monies disbursed for concession payments cannot be used by the universities for other purposes,” it said.
Recall that Sasaran Etika and UniTapah receive concession payments from IIUM and UiTM for the completion of residential colleges and a campus, respectively.
RAM Ratings pointed out that to date, payments of availability charges to the concessionaires have been timely, with UniTapah and Sasaran Etika having received payments up to November and December 2016.
Sasaran Etika’s RM220mil fixed rate serial bonds (2012/2027) are rated AA1/stable while UniTapah’s Sukuk Murabahah of up to RM600mil (2014/2035) carries a AA2/positive rating.
The Budget 2017 reduced allocations for the operating expenditure of IIUM and UiTM for this year by a respective 23% and 25% on-year subsequent to cuts of 8% and 24%, respectively, in 2016.
