Published on 11 Nov 2019.
RAM Ratings has reaffirmed the AAA/Stable ratings of the respective Class A and Class B Notes of Tranches 1 and 2 of Al Dzahab Assets Berhad’s (the Issuer) Sukuk Murabahah. Concurrently, we have upgraded the rating of the Issuer’s Tranche 5 Class B Sukuk Murabahah to AAA/Stable, from AA1/Positive (refer to table below). Al Dzahab is an SPV that had been incorporated to undertake the securitisation of personal-financing (PF) facilities originated through the business partners of RCE Marketing Sdn Bhd (the Originator).
Upgraded from AA1/Positive
Each tranche of the Sukuk is backed by its own respective discrete portfolio of PF receivables from civil servants. As these receivables are paid through non-discretionary salary deductions processed by the Accountant General’s Department and Angkatan Koperasi Kebangsaan Malaysia Berhad (better known as Angkasa), the transaction’s exposure to the credit risks of the borrowers is significantly reduced, as long as the borrowers remain in active service.
The rating reaffirmation is supported by the credit support available for all the rated classes of the Sukuk, which remains commensurate with an “AAA” stress scenario. The rating upgrade for the Tranche 5 Class B Sukuk is premised on its improved credit support, to a level supportive of a higher-stress scenario under the revised rating. The underlying pools’ loss performance that remained within our assumptions contribute to better asset coverage for the respective tranches, as observable in the other tranches under Al Dzahab and Zamarad Assets Berhad – the Originator’s most recent securitisation vehicle.
Although unlikely at this juncture, downside risks could stem from changes in regulatory policies or guidelines relating to salary deductions, which in turn may affect future delinquencies and the prepayment performance of the underlying receivables. While material downsizing is not expected in the foreseeable future, the Government is studying the need to consolidate agencies and ministries to avoid overlapping functions. This may result in a higher incidence of transfers and, in turn, possibly longer administrative delays in deductions. Prepayments may deviate from our expectations if the Government decides to extend the current retirement age or significantly relax lending guidelines.
Tan Han Nee
(603) 3385 2529
(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.
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Rating Rationale: Al Dzahab Assets Berhad Tranche 1
Rating Rationale: Al Dzahab Assets Berhad Tranche 2
Rating Rationale: Al Dzahab Assets Berhad Tranche 5
Ratings on Al Dzahab Assets Berhad