RAM Ratings reaffirms AA3/Stable rating of Exsim Development -sponsored Tranche 2 IMTN

Published on 30 Sep 2022.

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RAM Ratings has reaffirmed the AA3/Stable rating of the RM323 mil Tranche 2 IMTN under Exsim Capital Resources Berhad’s (Exsim Capital or the Issuer) RM2 bil Sukuk Musharakah Programme. 

The Tranche 2 IMTN is backed by future sale and purchase agreement (SPA) receipts from the development of D’Quince and D’Vervain (collectively, the Projects) in Damansara Perdana, Selangor. Exsim Capital is a special-purpose vehicle wholly owned by Exsim Development Sdn Bhd (Exsim Development). The Projects’ combined take-up rate by units was 99.9% as at end-July 2022, up from 97.9% as at end-May 2021.

The reaffirmation of the rating reflects the Projects’ satisfactory construction progress and adequate liquidity in the transaction. As a result of the suspension of construction works for most of June and July 2021 because of Covid-19 mobility curbs, the developer gave the contractor a 46-day extension of time (EOT). While the respective legal certificate of practical completion (CPC) dates for D’Quince and D’Vervain were pushed back to 20 August and 21 October 2023, the remaining available time buffer is still adequate, with an 11- to 12-month gap to the legal certificate of completion and compliance (CCC)/vacant possession (VP) date (12-13 months previously). The revised legal CPC dates are about 15 to 17 months away from the sukuk’s expected maturity date of 9 January 2025. 

On 19 August 2022, the developer was granted an EOT of 304 days by the Ministry of Housing and Local Government. This provides a further 10-month time buffer to complete and deliver the Projects to the buyers, but is just a contingency plan as the developer’s target to complete/deliver the CCC/VP in August/November 2023 remains unchanged.

During the review period, the Projects were not materially affected by continuing headwinds from the pandemic and geopolitical tensions. As at 1 August 2022, construction progress for D’Quince and D’Vervain was largely on schedule under the revised CPC timeline, with more than one-third of the Projects’ physical works completed. No notable shortage of labour or building materials was observed to have impacted construction progress. Cost pressures arising from the elevated prices of raw materials have not resulted in any cost overrun, given the fixed-price lump-sum construction contracts. Amid the challenging operating environment, we are comforted by the contractor’s more than 40 years of experience, track record in project execution and solid financial performance to date. 

The transaction’s liquidity position is underpinned by a healthy buyers’ profile and the available RM80 mil Tranche 2 Islamic Commercial Papers (ICP) facility. Since issuance, a total of RM63 mil has been drawn on the ICP facility for working capital and rollover purposes.  To date, the maximum total outstanding ICP was RM40 mil, exceeding our expectation due to higher working capital needs during periods of movement restriction. Satisfactory construction progress however had reduced the outstanding ICP by nearly half. 

As at end-July 2022, the RM40 mil cash balance in the projects’ Housing Development Accounts and the estimated net cashflow of RM460 mil to be collected under the SPAs (after payment of remaining gross development cost) are more than sufficient to cover the transaction’s expenses, outstanding ICP and finance obligations in respect of the Tranche 2 IMTN.

Analytical contacts

Liew Kar Ling
(603) 3385 2586

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.

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Similarly, the disclaimers above also apply to RAM Ratings’ credit-related analyses and commentaries, where relevant.

Published by RAM Rating Services Berhad
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