RAM Ratings reaffirms AAA ratings of Silver Sparrow’s guaranteed MTN

Published on 07 Jan 2020.

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RAM Ratings has reaffirmed the AAA(fg)/AAA(bg)/Stable ratings of Silver Sparrow Berhad’s (the Company) RM515 mil Guaranteed MTN Programme (2011/2021). The ratings reflect the irrevocable and unconditional guarantees extended by Danajamin Nasional Berhad (rated AAA/Stable/P1 by RAM), Malayan Banking Berhad (AAA/Stable/P1) and OCBC Bank (Malaysia) Berhad (AAA/Stable/P1) on a proportionate basis. Aseana Properties Limited (Aseana or the Group), via an unconditional and irrevocable corporate guarantee, undertakes to ensure that Silver Sparrow - its wholly owned subsidiary – will meet its obligations under the Guaranteed MTN Programme (the Programme). 

Aseana is a closed-end fund listed on the Main Market of the London Stock Exchange. The Group is principally involved in property development in Malaysia and Vietnam. Silver Sparrow had been incorporated as a funding vehicle to facilitate the issuance of the Programme. The issuance proceeds had been used to refinance the borrowings of Silver Sparrow’s sister companies, as well as to part-finance the development of Sandakan Harbour Square, an integrated complex comprising Sandakan Harbour Mall and a four-star hotel (Four Points by Sheraton Sandakan) as well as to fund the acquisition of Aloft Kuala Lumpur Sentral, which has since been disposed of. Following the extension of Aseana’s shelf life to May 2021, the Group’s shareholders will be given the option to vote for its continuation if its remaining assets are not divested by then. 

The Group’s stand-alone credit profile remains weak as its remaining investment assets are still loss-making, despite some operational improvements in FY Dec 2018 and up to 3Q FY Dec 2019. The average occupancy rate (AOR) of Sandakan Harbour Mall was lifted to a respective 73% and 82% in FY Dec 2018 and 3Q FY Dec 2019 (FY Dec 2017: 70%; 10M FY Dec 2018: 78%). Meanwhile, the AOR of Four Points by Sheraton Sandakan (Four Points Hotel) stayed low at 45% in 3Q 2019 (3Q 2018: 40%). 

In Vietnam, both in-patient days and outpatient visits at City International Hospital (CIH) improved 22% in fiscal 2018. In 1Q fiscal 2019, CIH recorded respective 17% and 16% y-o-y increases in-patient days and outpatient visits. However, such improvements have not turned around the assets’ loss-making position. That said, these assets are expected to break even in the foreseeable future.

Aseana's debt level stayed relatively unchanged as at end-December 2018 and end-June 2019, with stable gearing ratios of a respective 0.73 and 0.75 times (end-December 2017: 0.74 times). Nonetheless, the Group’s debt coverage thinned in FY Dec 2018 and 1H FY Dec 2019; its operating income segued into narrow losses amid heftier expenses. Aseana had rolled over its RM100 mil (about USD25 mil) of debt obligations under the Programme - which falls due on 10 December 2019 - for another 12 months, and will keep doing so until its properties are divested. 

On 21 March 2019, Aseana’s development manager – Ireka Development Management Sdn Bhd (IDM) - submitted a notice to terminate its appointment. Pursuant to this, Aseana has internalised its management; Chan Say Yeong was appointed as the Group’s CEO in June 2019. Despite the change, Aseana will remain managed by an experienced team; its new CEO has a long-established track record in the banking and real estate industries while the rest of the line-up are seconded from IDM.


Analytical contact
Thong Mun Wai
(603) 3385 2522

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.

Published by RAM Rating Services Berhad
© Copyright 2020 by RAM Rating Services Berhad

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