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RAM Ratings reaffirms AAA ratings of Premium Commerce’s Notes Series 2016-A

Published on 07 Dec 2021.

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RAM Ratings has reaffirmed the AAA/Stable ratings of the Class A and Class B Notes under Premium Commerce Berhad’s (PCB or the Issuer) Notes Series 2016-A.

Notes Series 2016-A

Rating/ Outlook

Rating Action

Issued Amount
(RM mil)

Outstanding Amount^
(RM mil)

OC Ratio^

Class A Notes

AAA/Stable

Reaffirmed

204.00

52.0

31.58%

Class B Notes

AAA/Stable

Reaffirmed

4.50

4.50

21.10%

Class C Notes

Not rated

-

11.25

11.25

-

Total rated

 

 

208.50

56.50

 

OC = overcollateralisation, including balances in Collection Account
^ As at 30 September 2021
 

The ratings reflect the strong credit support afforded by the overall satisfactory loss performance of the underlying portfolio backing Notes Series 2016-A (2016-A Pool). The available collateral coverage provides the transaction with strong credit protection against the risk of default and prepayment, corresponding to an AAA stress scenario. During the 12-month period ending September 2021, the cumulative net default rate stayed below our base assumption while average monthly prepayment rate was largely stable above our low stress assumption. As a result, RM30.0 mil of the Class A Notes was prepaid during the same period. 

TC Capital Resources Sdn Bhd’s performance as the servicer of the transaction remains adequate. Payments over the counter were disrupted by the temporary closure of the servicer’s office in June 2021 and selected borrowers were allowed to partially defer monthly instalments for four months from May to August 2021. The 2016-A Pool’s delinquency profile deteriorated during the various lockdown phases but showed consistent recovery when movement restrictions were relaxed, aided by the servicer’s collection efforts. The proportion of receivables in arrears for three months and above stayed manageable, albeit increasing slightly to 4.58% of the total outstanding amount as at end-September 2021 (end-September 2020: 3.37%). 

In addition, some 7.18% of the 2016-A Pool’s total remaining principal balance was restructured as at the same date (end-August 2020: 2.10%). Excess credit support built up in the transaction prior to the Covid-19 pandemic however helped offset the adverse effect of reduced instalment amount due under the restructured accounts. 

The transaction involves the securitisation of hire-purchase receivables originated by TC Capital Resources under PCB’s RM2.0 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.

 

Analytical contacts
Liew Kar Ling
(603) 3385 2586
karling@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



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Ratings on Premium Commerce Berhad 2016-A

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