RAM Ratings reaffirms AAA/stable rating of Eternal Icon’s Senior MTN backed by Plaza 33

Published on 27 Feb 2020.

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RAM Ratings has reaffirmed the AAA/Stable rating of Eternal Icon Sdn Bhd’s (EISB or the Issuer) RM87.00 mil Senior MTN. The reaffirmation reflects the overall stable performance of the collateral for the transaction – the office building, Plaza 33 – attributed to its near-full occupancy and healthy rental rate. Despite the challenging operating environment, Plaza 33’s net property income (NPI) improved to RM26.04 mil (unaudited) for FY Dec 2019, comfortably above our sustainable cashflow assumption of RM25.00 mil. Given that the Property’s adjusted valuation remains unchanged at RM263.20 mil, the resultant loan to value ratio of 33.10% and stressed debt service coverage ratio of 3.38 times continue to provide superior credit support for the AAA rating.

The completion of Symphony Square adjacent to Plaza 33 in 1Q 2019 had not affected the Property’s performance as most of the tenancies due to expire had been renewed. Symphony Square was reported to have registered an occupancy of 80%, with an average rental rate (ARR) of about RM5.00 psf. Going forward, we expect Plaza 33’s performance to stay stable given its competitive ARR of RM 4.88 psf coupled with its above-average property profile, as reflected by RAM’s Property Score of O-3.65 out of a maximum of O-5.00.

As at end-December 2019, Plaza 33’s tenant profile was still concentrated, with the top three tenants occupying 43.33% of its total net lettable area (NLA) and contributing 38.53% of rental income. The Property’s lease maturity profile, however, is well spread – leases for a respective 36%, 40% and 24% of total NLA are due to expire in 2020, 2021 and 2022. For 2020, we understand that Plaza 33’s largest tenant, which occupies 20% of NLA, has expressed an intention to extend its tenancy and is currently in negotiation with the management. Two other tenants have indicated that they will terminate their leases ahead of expiry, while another wishes to downsize upon the expiry of its lease this year. Nevertheless, we expect this attrition to be manageable as several existing tenants have expressed an interest in taking up space to be vacated. As such, we expect Plaza 33’s performance to remain largely intact going forward.

Under the MTN Programme of up to RM400.00 mil, RM86.00 mil of Senior MTN and RM254.00 mil of Sub-MTN have been issued to date. EISB will use net rental collections from the Property to meet coupon obligations in respect of the Senior MTN. Principal redemption is envisaged to be funded by exercising the Property Call Option under the Programme upon the expected maturity of the Senior MTN or by refinancing the Senior MTN through the issuance of Sub-MTN, failing which, via the sale of the Property by the Security Trustee.


Analytical contact
Lim Chern Yit
(603) 3385 2528

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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© Copyright 2020 by RAM Rating Services Berhad

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