RAM Ratings affirms AAA/Stable rating of Eternal Icon’s Plaza33-backed Senior Class MTNs

Published on 29 Mar 2023.

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RAM Ratings has affirmed the AAA/Stable rating of the Senior Class Medium Term Notes (MTNs) under Eternal Icon Sdn Bhd’s (the Issuer) RM400.0 mil MTN Programme (the Programme). To date, RM86.0 mil of Senior Class MTNs and RM254.0 mil of Subordinated Class MTNs have been issued.

The affirmation is premised on our view that Plaza33’s (the Property) performance will gradually improve to our annual sustainable cash flow assumption of RM22.0 mil over the next three years in line with recovery in economic activities. Based on RAM’s RM244.44 mil assessed adjusted valuation of Plaza33, the Senior Class MTNs have superior collateral support, evidenced by the loan to value ratio of 35.6% and stressed debt service coverage ratio of 2.97 times. 

Several unrenewed leases and marginally lower rental rates in FY Dec 2022 had pushed the Property’s revenue 9.3% lower to RM28.54 mil (FY Dec 2021: RM31.47 mil). This, coupled with higher operating expenses, resulted in a weaker net property income of RM18.53 mil (FY Dec 2021: RM22.32 mil), as expected in our previous review. Going forward, however, Plaza33’s performance will gradually improve owing to its solid market position and management’s ability to attract and retain tenants, as seen in the Property’s above-industry average occupancy and rental rates since its opening in 2014, despite the competitive office environment. 

Pending the finalisation of the second issuance under the Programme, i.e., the ASEAN Green Second MTNs (click here for more information), the redemption of Eternal Icon’s RM15.0 mil Senior Class MTN Series 1 on its expected maturity date of 31 March 2023 will be redeemed with proceeds from the issuance of RM15.0 mil Senior Class MTN Series 4. Series 4 will have the same expected and legal maturity dates as Series 2. Upon issuance of the ASEAN Green Second MTNs, the Issuer is expected to early redeem all outstanding MTNs under the first issuance. To facilitate this exercise, the Issuer will seek the MTN holders’ approval to revise the terms of the Programme to extend its tenure by 20 years, to allow for the issuance of ASEAN Green MTNs, and to allow for the early redemption of the existing MTNs.

Eternal Icon is a special-purpose vehicle set up to undertake the securitisation of Plaza33, an integrated office tower in Petaling Jaya. The Issuer will use net rental collections from the Property to pay its coupon obligations in respect of the Senior Class MTNs, and if there is a surplus of cash, the Subordinated Class MTNs.


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.

Published by RAM Rating Services Berhad
© Copyright 2023 by RAM Rating Services Berhad

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