RAM Ratings reaffirms AA3/Stable rating of Exsim Capital’s Tranche 3 IMTN

Published on 20 Dec 2022.

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RAM Ratings has reaffirmed the AA3/Stable rating of the RM300 mil Tranche 3 IMTN under Exsim Capital Resources Berhad’s (Exsim Capital or the Issuer) RM2 bil Sukuk Musharakah Programme. 

Exsim Capital is a special-purpose vehicle wholly owned by Exsim Development Sdn Bhd. The Tranche 3 IMTN is backed by future sale and purchase agreement (SPA) receipts from D’Erica Residences (the Project), located in Damansara Perdana, Selangor. The Project recorded take-up rate by units of 99.7% as at end-October 2022.

The reaffirmed rating is premised on the Project’s satisfactory construction progress and the transaction’s adequate liquidity and time buffer. As at 1 November 2022, construction progress at D’Erica under a revised timeline was behind by 32 days due to the labour shortage faced by the contractor. Given their involvement in multiple projects in Central Park Damansara, the contractor has the flexibility to deploy and/reallocate manpower to the relevant projects to help expedite progress, if required. Even if the labour issue persists, the IPC opines that the construction works should not be delayed by more than three months, well within the available time buffer of nine months between the Project’s legal Certificate of Practical Completion and Vacant Possession (VP) dates. 

Notwithstanding a 304-day extension of time granted by the Ministry of Housing and Local Government on 19 August 2022, the developer is committed to delivering the Project to buyers by the original Certificate of Completion and Compliance/VP date in April 2024. As the extension of time serves only as a contingency measure, we have not taken it into consideration in our assessment. 

Cost pressures arising from elevated prices of raw materials like cement and steel have not resulted in any cost overrun for the Project, given the fixed-price lump-sum construction contract awarded by the developer to the contractor. Amid the challenging operating environment, we are comforted by the contractor’s more than 40 years of experience, its track record in project execution and solid financial performance to date. 

The transaction’s liquidity position remains adequate, underpinned by a healthy buyers’ profile and the RM75 mil Tranche 3 Islamic Commercial Papers (ICP) facility. Since issuance, a total of RM30 mil has been drawn down and/or rolled over from the ICP facility for working capital purpose. Since initial issuance, the maximum amount of ICP outstanding from the ICP facility was RM22 mil.

As at end-October 2022, the cash balance of RM22 mil in the Project’s Housing Development Accounts and the estimated remaining net cashflow of RM443 mil to be collected under the SPAs (after payment of remaining gross development cost) are more than sufficient to cover transaction expenses and outstanding ICP and finance obligations in respect of the Tranche 3 IMTN.


Analytical contacts
Joel Thum
(603) 3385 2517

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
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