profile search
latest updates
Press Release
12 Apr | Monday
RAM Ratings reaffirms AA3/Stable rating of Tranche 1 IMTN issued by Exsim Ventures
RAM Ratings has reaffirmed the AA3/Stable rating of the RM68 mil Tranche 1 IMTN under Exsim Ventures Berhad’s (the Issuer) RM2 bil Sukuk Musharakah Programme (IMTN Programme). The Tranche 1 IMTN is backed by sale and purchase agreements (SPAs) signed with buyers relating to a high-rise commercial development – Scarletz Suites – located on Lorong Yap Kwan Seng, Kuala Lumpur (Scarletz or the Project). Exsim Ventures is a wholly owned subsidiary and special-purpose vehicle of Exsim Development Sdn Bhd (Exsim Group).
 
The reaffirmation of the rating reflects satisfactory construction progress and adequate liquidity in the transaction to bridge any cashflow timing mismatches arising from the suspension of construction works between March and April 2020 due to the Movement Control Order (MCO). The targeted date for issuance of Certificate of Practical Completion (CPC) had been pushed back to 15 November 2021 as a result of the three-month extension of time granted to the contractor. Nevertheless, the available time buffer remains sufficient with about six months between the developer’s targeted date for issuance of Certificate of Completion and Compliance (CCC) and Vacant Possession (VP) in May 2022. As at end-January 2021, the contractor had caught up on construction work to some extent, with 69.7% having been completed against the 70.1% under the revised timeline. 
 
As at the same date, Scarletz stayed fully sold as five defaulted units were resold within two months during the review period. Progress billing payments from end-financed purchasers were minimally affected under the MCO and unimpacted by the mandatory six-month bank loan repayment moratorium. The developer had allowed cash buyers to defer payments between March and September 2020, of which 6.3% of gross development value were affected. These cash buyers were given the option to pay the deferred amount over three to six months, starting October 2020. 
 
Deferred payments from cash purchasers and the administrative backlog in progress billing payments resulted in a larger than expected draw on the RM35 mil Tranche 1 ICP facility (RM28.42 mil vs RM11.76 mil) to fund working capital. That said, the amount drawn had been fully repaid. We anticipate minimal need to draw on this liquidity line going forward.
 
More recently, several foreign workers at the project site had contracted Covid-19. In line with the standard operating procedure, all works were suspended for two weeks in mid-February for testing, quarantine and monitoring of workers. All related expenses will be fully borne by the contractor. While we derive comfort from the fixed-price lump-sum contract with the contractor, any potential renegotiation of contract sums should be adequately cushioned by the Project’s estimated cost savings of RM27.89 mil (15.2% of total contract sum) from lower carpentry and electrical appliance costs.
 
Based on the latest progress report dated end-January 2021, physical construction work has reached an advanced stage and is on track to meet the CPC date, as verified by the Independent Project Certifier. In view of satisfactory construction progress and full take-up rate, with negligible cashflow loss arising from default, RAM expects the transaction to accumulate sufficient cash for full redemption of the Tranche 1 IMTN by 2H 2021, ahead of the targeted CPC date, as permitted under the transaction terms.
 
 
Analytical contact
Liew Kar Ling
(603) 3385 2586
karling@ram.com.my
 
Media contact
Padthma Subbiah
(603) 3385 2577
padthma@ram.com.my
 
Date of release: 9 April 2021
 
 
The credit rating is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment on the security’s market price or its suitability for a particular investor, nor does it involve any audit by RAM Ratings. The credit rating also does not reflect the legality and enforceability of financial obligations.
 
RAM Ratings receives compensation for its rating services, normally paid by the issuers of such securities or the rated entity, and sometimes third parties participating in marketing the securities, insurers, guarantors, other obligors, underwriters, etc. The receipt of this compensation has no influence on RAM Ratings’ credit opinions or other analytical processes. In all instances, RAM Ratings is committed to preserving the objectivity, integrity and independence of its ratings. Rating fees are communicated to clients prior to the issuance of rating opinions. While RAM Ratings reserves the right to disseminate the ratings, it receives no payment for doing so, except for subscriptions to its publications.
 
Similarly, the disclaimers above also apply to RAM Ratings’ credit-related analyses and commentaries, where relevant.
 
Published by RAM Rating Services Berhad
Copyright 2021 by RAM Rating Services Berhad
source: RAM Rating Services
Print Mail Twitter LinkedIn Facebook Google+
Past Articles
2021
May
April
March
February
January
2020
December
November
October
September
August
June
February
January
2019
December
November
October
September
August
July
June
May
April
March
January
2018
December
November
October
September
August
July
June
May
April
March
February
January
2017
December
November
October
September
August
July
June
May
April
March
February
January
2016
December
November
September
July
June
May
April
March
2015
June
May
April
March
February
January
2014
December
November
October
September
August
July
June
May
April
March
February
January
2013
December
October
July
May
April
March
2012
December