null RAM Ratings upgrades rating of Zamarad’s Tranche 1 Class B Sukuk, reaffirms ratings of Al Dzahab’s Tranches 3-5
RAM Ratings upgrades rating of Zamarad’s Tranche 1 Class B Sukuk, reaffirms ratings of Al Dzahab’s Tranches 3-5
9 Apr 2021 | Friday source: RAM Rating Services
RAM Ratings has upgraded the rating of Zamarad Assets Berhad’s Tranche 1 Class B Sukuk Murabahah to AAA from AA2 and revised the outlook to stable from positive, while reaffirming the AAA/Stable rating of the Class A Sukuk. Concurrently, the AAA/Stable ratings of the Class A and Class B Sukuk under Tranches 3 to 5 of Al Dzahab Assets Berhad’s Sukuk Murabahah have also been reaffirmed (see table below).
|OC ratio (%)||Rating/
|Zamarad’s Tranche 1|
|Al Dzahab’s Tranche 3|
|Al Dzahab’s Tranche 4|
|Al Dzahab’s Tranche 5|
OC = overcollateralisation (with cash)
^ As at end-December 2020
Each tranche of the Sukuk is backed by its own portfolio of personal financing (PF) receivables from civil servants, originated by RCE Marketing Sdn Bhd (RCEM) through its business partners. These receivables are repaid through non-discretionary salary deductions processed by two collection agents – Angkatan Koperasi Kebangsaan Malaysia Berhad and EXP Payment Sdn Bhd (the exclusive agent for Yayasan Ihsan Rakyat’s Accountant General Department of Malaysia Code). The historically low attrition rate of civil servants and non-discretionary repayments via salary deductions reduce the transactions' exposure to a customer’s credit risks as long as the customer remains a government employee.
The rating actions reflect the better than assumed loss performance of the portfolios backing the respective tranches, and the resultant strong credit support that is more than sufficient to cover losses assumed in an AAA rating stress scenario. The default experience of the portfolios generally outperformed our base assumptions. Other than some spikes in prepayments in 2H 2020, the average prepayment rates remained well within our stressed assumptions.
Despite the recently imposed second Movement Control Order, RCEM does not intend to offer customers a moratorium on repayments. Given that it had only considered requests for deferments on a case-by-case basis last year, less than 0.4% of RCEM’s outstanding PF then had benefited from the moratorium. PF facilities under moratorium are not eligible for securitisation under the sukuk programmes.
Loh Kit Yoong
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Date of release: 8 April 2021
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