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RAM Ratings downgrades Menara ABS’s Tranche A Sukuk to D following non-payment event
Published on 13 Jan 2023.
RAM Ratings has downgraded to D (from C3/Negative) the ratings of the RM345 mil Tranche A1 to A4 Sukuk (collectively, the Tranche A Sukuk) under Menara ABS Berhad’s (the Issuer) RM1 bil Sukuk Ijarah Programme (2008/2023).
The D rating reflects Menara ABS’s failure to redeem the RM345 mil Tranche A Sukuk due on 13 January 2023, as confirmed by the Facility Agent, Affin Hwang Investment Bank Berhad, in an announcement on the Fully Automated System for Issuing/Tendering (FAST). We believe the seven-business day remedy period under the transaction will not be sufficient to resolve the non-payment event, given minimal progress on the Issuer’s asset disposal exercise and an absence of contingent plans. Estimated cash balances in the designated accounts would be enough to cover the final periodic distribution but insufficient to redeem all of the Tranche A Sukuk.
Menara ABS is a trust-owned special-purpose entity sponsored by Telekom Malaysia Berhad to facilitate the securitisation of four of its properties – Menara TM, Menara Celcom, TM Taman Desa and TM Cyberjaya – via a sale and leaseback or master ijarah arrangement. Cashflow to redeem the Tranche A Sukuk was intended to come from either the refinancing of the sukuk, asset disposal or the provision of special funding by Tranche C sukukholders (click here to see press release published on 21 September 2022 for further information).
Under RAM’s rating definitions, a sukuk facility rated D is either currently in default or faces imminent default on its financial obligations, whether or not formally declared. A D rating may also reflect a distressed exchange, the filing of bankruptcy and/or other actions pertaining to the issuer that could jeopardise payments of a particular sukuk facility.
Analytical contacts
Joel Thum
(603) 3385 2517
joel@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.
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