RAM Ratings assigns preliminary AAA rating to first ASEAN Green MTNs office securitisation to be issued by Eternal Icon

Published on 21 Feb 2023.

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RAM Ratings has assigned a preliminary rating of AAA/Stable to the proposed up to RM87.0 mil ASEAN Green Senior Class Medium Term Notes (Senior Class MTNs) to be issued under Eternal Icon Sdn Bhd’s (the Issuer) RM400.0 mil MTN Programme. This will be the first ASEAN Green MTNs in Malaysia backed by an office property, a testament to the greater acceptance and adoption of the environmental, social and governance agenda. Proceeds raised from the issuance will be used to refinance all outstanding MTNs under the MTN Programme on 31 March 2023 (click here for more information).

Eternal Icon is a special-purpose vehicle set up to undertake the securitisation of Plaza33 (the Property), an integrated office tower located in Petaling Jaya. The Property is a multi-tenanted office building comprising two 14-floor towers, two levels of retail space and seven car park levels. 

Overall, we view Plaza33’s asset quality as above average, with a RAM Property Score of O-3.70 (out of a maximum of O-5.00). Based on RAM’s adjusted valuation of RM244.44 mil for the Property, the resultant loan to value ratio of 35.6% and stressed debt service coverage ratio of 2.97 times for the Senior Class MTNs commensurate with the rating assigned. 

The preliminary rating also considers the transaction’s structural features, including a performance-based indicator to trigger the Property’s early disposal if actual net property income falls below RM15.0 mil. Given lacklustre office market conditions, a tail period of three years has been incorporated to allow for disposal, if necessary. The transaction also includes a pre-funded debt service reserve account equivalent to the immediate next 12 months Senior Class MTNs coupon which can be used to meet coupon obligations, if necessary. 

Since its launch in 2014, Plaza33 has been recording above-industry average occupancy rate (AOR) and average rental rate (ARR) despite its sizeable net lettable area and a competitive office environment, reflecting its solid market position relative to the offices in its vicinity. For 11M FY Dec 2022, the Property’s AOR and ARR were lower y-o-y at 78.9% and RM4.63 psf, respectively, mainly due to several non-renewals and marginally lower rental rates. While this will result in lower annual net property income for 2022 (annualised RM18.5 mil for 2022 vs RM22.3 mil for 2021), we expect the Property’s performance to gradually improve in line with recovery in economic activities, albeit at a slower pace in view of heightened competition in the office sector. 

As at end-January 2023, leases for a respective 36.8%, 10.1%, 20.3% and 3.7% of the Property’s net lettable area are due to expire in 2023, 2024, 2025 and 2026. Negotiations with tenants whose leases are due for renewal this year have commenced and none of the tenants have indicated intention to move out in preliminary discussions. The management is also in talks with prospective tenants for remaining vacant office space. Retail space at Plaza33 is fully occupied. 

As the rating is preliminary, any material changes in the underlying assumptions may result in a change in the rating. A final rating will be assigned after RAM’s satisfactory review of the final transaction documents. 


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.

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.

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