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

Published on 28 Sep 2022.

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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. 

The transaction involves the securitisation of hire-purchase receivables originated by TC Capital Resources (TCCR) under PCB’s RM2.0 bil Asset-Backed MTN Programme. TCCR 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.

Notes Series 2016-A

Issued Amount
(RM mil)

Outstanding Amount^
(RM mil)

OC Ratio^

Rating / Outlook

Rating Action

Class A Notes

204.00

32.0

49.65%

AAA/Stable

Reaffirmed

Class B Notes

4.50

4.50

31.20%

AAA/Stable

Reaffirmed

Class C Notes

11.25

11.25

-

Not rated

-

Total rated

208.50

36.50

 

 

 

OC = overcollateralisation, including balances in Collection Account
^ As at end-July 2022

 

The rating actions reflect the strong credit support afforded by the overall satisfactory asset performance of the underlying portfolio backing Notes Series 2016-A (2016-A Pool). The collaterals comprising balances in Collection Account and outstanding hire-purchase receivables provide the transaction with strong credit protection that commensurate with the AAA rating. 

During the 12-month period ending July 2022, the cumulative net default rate stayed below our base assumption while the average monthly prepayment rate was still above our low prepayment stress assumption. The delinquency profile improved as TCCR continued to closely monitor borrower repayment behaviour, providing restructuring plans on a case-by-case basis if required. While some 9.98% of the 2016-A Pool’s total remaining principal balance of receivables had been restructured as at end-July 2022 (end-September 2021: 7.18%), credit support built up prior to the Covid-19 pandemic helped cushion the adverse effect of reduced instalment amounts due under these accounts. 

As a result, RM26.0 mil of the Class A Notes was prepaid during the same period. Considering TCCR’s proven servicing ability during the health crisis, we believe 2016-A Pool will continue to perform within our assumptions. 

 

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 2022 by RAM Rating Services Berhad



Rating Rationale

Ratings on Premium Commerce Berhad 2016-A

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