RAM Ratings puts Quill Retail Malls’ sukuk on Negative Rating Watch

Published on 29 Mar 2022.

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RAM Ratings has placed the ratings of Quill Retail Malls Sdn Bhd’s (QRMSB or the Issuer) Class A, Class B, Class C and Class D Sukuk Murabahah on Rating Watch with a negative outlook (see table below). The sukuk is secured against Quill City Mall (the Property), a 781,989 sf shopping mall on Jalan Sultan Ismail in Kuala Lumpur.

RAM understands that the Issuer has initiated an exercise to refinance the sukuk via two unrated guaranteed bond facilities. We note that the progress of the refinancing exercise has been delayed and will not be completed by the sukuk’s expected maturity (EM) of 31 March 2022.

The rating action is premised on the expectation that the existing RM50 mil bank guarantee (BG) facility expiring on the EM date will not be fully drawn (and deposited into the FSRA) or extended up to the legal maturity date as intended under the structure. With the expected RM17.0 mil of cash balance in the FSRA as at end-March 2022, the transaction only has sufficient liquidity to meet the next two or three profit payments (until September 2022 or March 2023), potentially accelerating a default event ahead of legal maturity in March 2024, if the refinancing exercise fails to meet completion date by end-June 2022 (three months after EM) as targeted. 

We understand that the Issuer will seek sukukholders’ approval for the proposed extension of time (EOT) until 30 June 2022 to redeem the sukuk and waiver for the requirement to have a BG facility and all other terms related to it during the EOT period. 

RAM will closely monitor the development of the refinancing exercise and the Rating Watch is expected to be resolved within the next two to three months following meaningful progress in the issuance of the unrated bonds. Failing which, the ratings will face a multi-notch downgrade if the Issuer’s access to contingent liquidity facility is not adequately reinstated to avert the accelerated default event in March or September 2023.

Sukuk Murabahah

Rating/Rating Watch

Outstanding Amount
(RM million)

Expected Maturity

Legal Maturity

Class A



31 March 2022

29 March 2024

Class B



31 March 2022

29 March 2024

Class C



31 March 2022

29 March 2024

Class D



31 March 2022

29 March 2024


As it stands, the bond facilities have been lodged with the Securities Commission and nearly all the transaction documents for the refinancing exercise have been finalised. We understand subscribers for both the facilities have been secured and financial close is contingent upon execution of the transaction documents and meeting the relevant conditions precedent. Based on our discussion with the transaction parties, QRMSB is on track to issue the unrated bonds and redeem the sukuk by mid-May 2022.

Various on-off movement control orders (MCO) during FY Dec 2021 caused the Property’s gross rental revenue to decline 4.5% to RM12.5 mil (FY Dec 2020: RM13.1 mil). However, net property income increased to RM1.4 mil from RM0.3 mil in 2020 due to effective cost management. Average occupancy rate was also better at 72.2% (2020: 67.7%) despite the mall’s occupancy tapering off from July 2021 onwards when retailers affected by MCO 3.0 (April to July 2021) terminated their leases. QRMSB had given selected tenants rental rebates and waivers as part of management’s strategy to preserve occupancy. Based on committed leases, the Property’s occupancy rate is expected to reach 85.0% by end-2022. 

QRMSB is a member of the Quill Group, a multi-disciplinary group involved in property development and investment, distribution of luxury vehicles, and health services.

RAM’s Rating Watch highlights a possible change in an issuer’s debt rating. It focuses on identifiable events such as mergers, acquisitions, regulatory changes and operational developments that place a rated debt under RAM’s special surveillance. In a broader sense, the Rating Watch covers any event that may result in changes in risk factors relating to the repayment of principal and interest.

Issues are put on Rating Watch when some of the abovesaid events are expected to or have occurred. The Rating Watch, however, does not mean that the rating will inevitably be changed. It only means that RAM is evaluating the rating and a final affirmation is pending. A ”positive” outlook indicates that a rating may be raised while a "negative" outlook indicates a possible downgrade. A “developing” outlook refers to unusual situations in which future events are so unclear that the rating may potentially be raised or lowered.


Analytical contacts
L Nurisya Abdullah
(603) 3385 2529

Lim Chern Yit
(603) 3385 2528


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 2022 by RAM Rating Services Berhad

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