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RAM Ratings affirms Zamarad’s Tranche 2, 3, 5, 8 and 9 sukuk ratings
Published on 02 Oct 2024.
RAM Ratings has affirmed the ratings of Zamarad Assets Berhad’s Tranche 2, 3, 5, 8 and 9 Sukuk Murabahah (see table). Zamarad is a special-purpose vehicle incorporated to undertake the securitisation of personal financing (PF) facilities extended to civil servants, originated through the business partners of RCE Marketing Sdn Bhd.
The rating affirmations reflect the underlying receivables’ favourable default and prepayment performances relative to our assumptions, which provide credit support commensurate with the respective ratings of all tranches under review. We expect these trends to continue going forward in view of non-discretionary salary deductions through which the PF is repaid and low attrition rates in the civil service.
Specific to Zamarad’s Tranches 8 and 9, the terms of which include Revolving Options (ROs), we expect the utilisation of excess cash reserves for the purchase of new receivables, if any, to keep credit support adequate for the respective AAA and AA2 ratings of the Class A and Class B Sukuk. Under the transaction terms, any exercise of the RO should not have an adverse impact on existing ratings.
During the review period, all the securitised portfolios backing the respective tranches saw no major deterioration in overall asset quality despite some spikes in monthly default rates. These fluctuations were mainly due to collection timing or administrative delays during festive seasons which were remedied in the subsequent month.
While prepayments for the Tranche 8 and 9 Sukuk hovered closer to our low prepayment assumptions, those for the remaining tranches under review trended higher y-o-y, although still within our expectations. The elevated prepayment levels were mainly attributed to strong customer demand for refinancing to manage rising costs of living. For Tranches 8 and 9, we expect prepayment rates to gradually rise over time as the PF contracts become more seasoned. In the near term, upcoming civil servant salary adjustments may result in higher prepayments.
Analytical contacts
Sean Lim, CFA
(603) 3385 2550
sean@ram.com.my
Zachary Tan
(603) 3385 2612
zachary@ram.com.my
Media contact
Sakinah Arifin
(603) 3385 2500
sakinah@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.
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 2024 by RAM Rating Services Berhad
Rating Rationale: Zamarad Tranche 2
Rating Rationale: Zamarad Tranche 3
Rating Rationale: Zamarad Tranche 5
Rating Rationale: Zamarad Tranche 8
