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RAM Ratings upgrades rating of Zamarad’s Tranche 1 Class B Sukuk, reaffirms ratings of Al Dzahab’s Tranches 3-5

Published on 08 Apr 2021.

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RAM Ratings has upgraded the rating of Zamarad Assets Berhad’s Tranche 1 Class B Sukuk Murabahah to AAA from AA2 and revised the outlook to stable from positive, while reaffirming the AAA/Stable rating of the Class A Sukuk. Concurrently, the AAA/Stable ratings of the Class A and Class B Sukuk under Tranches 3 to 5 of Al Dzahab Assets Berhad’s Sukuk Murabahah have also been reaffirmed (see table below).

Sukuk Murabahah

Outstanding
Amount^
(RM mil)

OC ratio (%)

Rating/Outlook

Rating Action

 Zamarad’s Tranche 1

 

 

 

 

Class A

160.0

59.92

AAA/Stable

Reaffirmed

Class B

45.0

24.81

AAA/Stable

Upgraded

Total rated

205.0

 

 

 

 Al Dzahab’s Tranche 3

 

 

 

 

Class A

75.0

147.10

AAA/Stable

Reaffirmed

Class B

45.0

54.44

AAA/Stable

Reaffirmed

Total rated

120.0

 

 

 

 Al Dzahab’s Tranche 4

 

 

 

 

Class A

95.0

97.15

AAA/Stable

Reaffirmed

Class B

35.0

44.07

AAA/Stable

Reaffirmed

Total rated

130.0

 

 

 

 Al Dzahab’s Tranche 5

 

 

 

 

Class A

135.0

73.53

AAA/Stable

Reaffirmed

Class B

45.0

30.15

AAA/Stable

Reaffirmed

Total rated

180.0

 

 

 

OC = overcollateralisation (with cash)
^ As at end-December 2020

 

Each tranche of the Sukuk is backed by its own portfolio of personal financing (PF) receivables from civil servants, originated by RCE Marketing Sdn Bhd (RCEM) through its business partners. These receivables are repaid through non-discretionary salary deductions processed by two collection agents – Angkatan Koperasi Kebangsaan Malaysia Berhad and EXP Payment Sdn Bhd (the exclusive agent for Yayasan Ihsan Rakyat’s Accountant General Department of Malaysia Code). The historically low attrition rate of civil servants and non-discretionary repayments via salary deductions reduce the transactions' exposure to a customer’s credit risks as long as the customer remains a government employee.

The rating actions reflect the better than assumed loss performance of the portfolios backing the respective tranches, and the resultant strong credit support that is more than sufficient to cover losses assumed in an AAA rating stress scenario. The default experience of the portfolios generally outperformed our base assumptions. Other than some spikes in prepayments in 2H 2020, the average prepayment rates remained well within our stressed assumptions.

Despite the recently imposed second Movement Control Order, RCEM does not intend to offer customers a moratorium on repayments. Given that it had only considered requests for deferments on a case-by-case basis last year, less than 0.4% of RCEM’s outstanding PF then had benefited from the moratorium. PF facilities under moratorium are not eligible for securitisation under the sukuk programmes. 

 

Analytical contact
Loh Kit Yoong
(603) 3385 2493
kityoong@ram.com.my

Media contact
Padthma Subbiah
(603) 3385 2577
padthma@ram.com.my

 

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 2021 by RAM Rating Services Berhad



Rating Rationale: Zamarad Tranche 1

Rating Rationale: Al Dzahab Tranche 3

Rating Rationale: Al Dzahab Tranche 4

Rating Rationale: Al Dzahab Tranche 5

Ratings on Zamarad Assets Berhad

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