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RAM Ratings upgrades two classes of RCE Marketing-sponsored Zamarad’s Tranche 2 to 5 Sukuk

Published on 03 Nov 2021.

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RAM Ratings has upgraded two classes of Zamarad Assets Berhad’s Tranche 2 to 5 Sukuk Murabahah, revised the outlook on one class and reaffirmed six (see table below). Each tranche of the Sukuk is backed by its own discrete portfolio of personal financing (PF) receivables from civil servants, originated by RCE Marketing Sdn Bhd (RCEM) through business partners.

 

Sukuk Murabahah

Outstanding Amount*

(RM mil)

OC Ratio

Rating/ Outlook

Rating Action

Tranche 2

Class A

70.0

57.41%

AAA/Stable

Reaffirmed

Class B

20.0

22.43%

AAA/Stable

Upgraded from AA2/Stable

Total rated

90.0

 

 

 

Tranche 3

Class A

85.0

44.96%

AAA/Stable

Reaffirmed

Class B

20.0

17.35%

AA1/Positive

Upgraded from AA2/Stable

Total rated

105.0

 

 

 

Tranche 4

Class A

95.0

39.52%

AAA/Stable

Reaffirmed

Class B

25.0

10.46%

AA2/Stable

Reaffirmed

Total rated

120.0

 

 

 

Tranche 5

Class A

85.0

28.21%

AAA/Stable

Reaffirmed

Class B

15.0

8.98%

AA2/Stable

Reaffirmed

Total rated

100.0

 

 

 

OC= overcollateralisation (with cash)
* As at end-May 2021

 

The receivables are paid through non-discretionary salary deductions processed by the Accountant General’s Department and Angkatan Koperasi Kebangsaan Malaysia Berhad (Angkasa), which reduces the transaction’s exposure to the customers’ credit risks, as long as they remain in active service.

The rating actions are based on the better than assumed loss performance of the portfolios backing the respective tranches, which results in stronger credit support, commensurate with levels supportive of the reaffirmed and revised ratings of the respective classes. The positive outlook on the Tranche 3 Class B Notes reflects our expectation that its asset cover will improve to the level required for an AAA rating over the next 12 months based on the portfolio’s current performance. 

Given the stability exhibited by the various securitised portfolios, even during the pandemic and various lockdowns imposed, we believe that the asset performance in terms of delinquencies and defaults, is likely to sustain at its current trajectory. There was no major deterioration observed in the respective portfolio’s delinquency and default profile, thanks to the non-discretionary salary deductions that underpin the repayment of the PF facilities, apart from the low attrition rate in the civil sector. RCEM had granted payment assistance for less than 0.1% of outstanding PF facilities, even with the stricter Movement Control Order 3.0. PF facilities under relief are not eligible for securitisation under the sukuk programme.

Overall, the default experience of the portfolios generally outperformed our base assumptions. Other than some spikes in prepayments during the review period, the average prepayment rates stayed well within our stressed assumptions.


Analytical contacts
Kaylee Chiah
(603) 3385 2515
kaylee@ram.com.my

Tan Han Nee
(603) 3385 2529
hannee@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 Assets Berhad Tranche 2

Rating Rationale: Zamarad Assets Berhad Tranche 3

Rating Rationale: Zamarad Assets Berhad Tranche 4

Rating Rationale: Zamarad Assets Berhad Tranche 5

Ratings on Zamarad Assets Berhad

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