Published on 13 Dec 2019.
RAM Ratings has upgraded the rating of the outstanding RM4.5 mil of Class B Notes under Premium Commerce Berhad’s (PCB or the Issuer) Notes Series 2016-A to AAA from AA1. The rating outlook has been revised from positive to stable. Concurrently, we have reaffirmed the AAA/Stable ratings of the Class A Notes under PCB’s Notes Series 2016-A and the respective Class A and Class B Notes of its Notes Series 2015-A.
Notes Series 2015-A
Class A Notes
Class B Notes
Class C Notes
Notes Series 2016-A
Upgraded from AA1/Revised from Positive
OC = overcollateralisation, including balances in Collection Account
^ As at 31 August 2019
The rating action in respect of the Notes Series 2016-A is attributed to continued improvement in the overall loss performance of the underlying portfolio. During the review period, net monthly default rates averaged below our assumption while monthly prepayment rates continued to trend higher, remaining within our low and high stress scenarios. The available collateral support as reflected in the OC ratios was, in turn, enhanced to a level required to enable the transaction to withstand losses arising from defaults and prepayments assumed under an AAA stressed rating scenario for both Class A and Class B Notes.
Similarly, the reaffirmation of the ratings of Notes Series 2015-A is premised on the strong credit support afforded by the OC ratios – largely owing to the overall better than expected loss performance of the portfolio. Monthly prepayment rates averaged marginally below our low assumption during the review period, compensated by a better than assumed default performance.
Notably, continued deleveraging of the respective transactions via their pass-through mechanism further supports the ratings. Over the review period, a respective RM19 mil and RM25 mil of principal were prepaid on the Class A Notes of Notes Series 2015-A and Notes Series 2016-A. The ratings only address credit risks and not the risk of early redemption associated with these debt facilities.
These transactions involve the securitisation of hire-purchase receivables originated by Tan Chong Capital Resources under PCB’s RM2 bil Asset-Backed MTN Programme. Tan Chong Capital Resources is the hire-purchase captive financing arm of Tan Chong Motor Holdings Berhad, which in turn – via Tan Chong & Sons Motor Company – holds the sole right to assemble and distribute Nissan and Ultimate Dependability vehicles in Malaysia.
Tan Han Nee
(603) 3385 2529
(603) 3385 2577
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Rating Rationale: Premium Commerce Berhad Notes Series 2015-A
Rating Rationale: Premium Commerce Berhad Notes Series 2016-A
Ratings on Premium Commerce Berhad 2015-A