RAM Ratings assigns preliminary ratings to Tranche 3 Sukuk issued by RCE’s financing vehicle, Zamarad

Published on 23 Oct 2019.

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RAM Ratings has assigned preliminary AAA/Stable and AA2/Stable ratings to Zamarad Assets Berhad’s (the Issuer) Tranche 3 RM100 mil Class A Sukuk and RM20 mil Class B Sukuk, respectively. The Tranche 3 Sukuk is the third issuance under Zamarad’s RM2 bil Sukuk Murabahah Programme (the Programme). Notably, the Programme is RCE Marketing Sdn Bhd’s (RCEM) fifth debt capital market programme, including those issued by Al Dzahab Assets Berhad and Tresor Assets Berhad. As with its previous issuances, the Tranche 3 Sukuk will be collateralised by personal financing (PF) facilities extended to civil servants originated by RCEM through its business partners. These facilities will be repaid primarily via non-discretionary salary deductions processed by the Accountant General’s Department and Angkatan Koperasi Kebangsaan Malaysia Berhad (better known as Angkasa), thereby materially reducing the transaction’s exposure to the borrower’s credit risks as long as the borrower remains in active service.

The Tranche 3 Sukuk will be backed by a provisional portfolio of PF facilities with an outstanding principal value of RM124.25 mil, based on the cut-off date of 31 August 2019, and required cash reserves of RM2.68 mil at closing. The provisional pool and cash reserve provide for respective overcollateralisation (OC) ratios of 26.93% and 5.77% for the Tranche 3 Class A and Class B Sukuk. The available collateral cover will be adequate to meet full and timely payment of financial obligations under default and prepayment stressed scenarios that are commensurate with RAM’s AAA and AA2 benchmarks. This is consistent with the loss assumptions and stress scenarios applied for the last two tranches issued by Zamarad this year. For more information, please refer to our media release on the Tranche 1 Sukuk here.

RCEM’s performance as the Servicer of the transaction remains satisfactory, in view of its experience of almost 15 years. An established originator and servicer, RCEM has extended PF since 2003 and raised a cumulative RM2.67 bil of securities backed by its portfolio of PF since 2004. To date, the performance of the securitised portfolios under Al Dzahab and Zamarad has been stable and well within expectations. While material downsizing is not anticipated for the foreseeable future, the government’s proposed consolidation of agencies and ministries to avoid overlapping functions could result in a higher incidence of transfers and, in turn, possibly more administrative delays in deductions. Prepayments may also deviate from our expectations in the event that the government extends the current retirement age. This is, however, viewed as unlikely at this juncture as the government is still considering all options and has indicated that it will prioritise the improvement of the country’s fiscal position and minimising the deficit. We will review RCEM’s static pool performance from time to time and may adjust our assumptions accordingly.


Analytical contact
Tan Han Nee
(603) 3385 2529

Media contact
Padthma Subbiah
(603) 3385 2577


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.

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