Published on 14 Dec 2020.
RAM Ratings has reaffirmed the AAA/Stable ratings of Premium Commerce Berhad’s (PCB or the Issuer) Class A and Class B Notes under the respective Notes Series 2015-A and 2016-A.
Notes Series 2015-A
Issued Amount(RM mil)
Class A Notes
Class B Notes
Class C Notes
Notes Series 2016-A
OC = overcollateralisation, including balances in Collection Account
^ As at 31 August 2020
The ratings reflect the strong credit support afforded by the OC ratios, largely attributed to the overall satisfactory loss performance of the underlying portfolio of the respective Notes Series. Faster than assumed deleveraging of the transactions via their pass-through liability repayment structure further adds to the buildup of credit support. During the review period, a respective RM17 mil and RM40 mil of principal on the Class A Notes of Notes Series 2015-A and 2016-A were prepaid early. The ratings address only credit risks and not the risk of early redemption associated with these debt facilities.
TC Capital Resources’ performance as the Servicer of the transaction remains satisfactory. In an effort to help customers affected by the Covid-19 crisis, the Servicer allowed selected hirers to defer 50%-100% of their monthly instalments for April to June 2020 for a period of three months. Although we observed a gradual improvement in average monthly collections – which suggests that affected hirers have, for the most part, caught up on deferred instalments – TC Capital Resources has facilitated the restructuring of some accounts. These, however, constituted only about 2% of the total remaining principal balance of the respective notes series as at end-August 2020.
Going forward, although cashflow recovery might be slower, given various forms of the Movement Control Order and the still-evolving situation amid the pandemic, the available OC provides a sufficient buffer against cashflow deterioration in ensuring timely repayment of coupon and principal obligations for the remaining tenure of the bonds.
The two transactions involve the securitisation of hire-purchase receivables originated by TC Capital Resources under PCB’s RM2 bil Asset-Backed MTN Programme. TC 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.
Liew Kar Ling
(603) 3385 2586
(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