RAM Ratings assigns AA2 rating to Poseidon’s Third Tranche Senior MTN

Published on 18 Feb 2025.

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RAM Ratings has assigned an AA₂/Stable rating to the RM350.0 mil Third Tranche Senior Class Medium-Term Notes (Senior MTN) to be issued by Poseidon ABS Berhad (Poseidon or the Issuer) under its RM3.5 bil perpetual asset-backed MTN programme. 

The Issuer is a trust-owned special-purpose vehicle (SPV) of SeaMoney Capital Malaysia Sdn Bhd (SCM), a leading digital finance services provider in Southeast Asia. The SPV facilitates the securitisation of Buy Now Pay Later (BNPL) receivables marketed under the SPayLater name and originated by SCM, primarily through the Shopee e-commerce platform. 

Proceeds from the Senior MTN, along with RM180.0 mil of unrated Junior MTN (collectively, the Third Tranche MTN), will fund the purchase of RM517.9 mil of eligible receivables from SCM for a purchase consideration of RM507.5 mil. Upfront programme expenses and required liquidity reserves will be prefunded by the Junior MTN, which will be subscribed by an entity within SCM’s Group. The Junior MTN are subordinated to the Senior MTN in terms of payment priority and claims. 

Apart from tranche-specific covenants and Servicer Triggers, the Third Tranche MTN closely mirrors the Second Tranche MTN, which RAM rated in October 2024 (see press release here). No material changes were noted in SCM’s business strategy, credit underwriting and collection policies since our initial rating of the Second Tranche MTN. Our assessment of the historical loss performance of its BNPL static pools showed continued improvement throughout 2024. Nevertheless, our base-case net default rate assumptions remain at 1.25% for the first month and 0.6% per month for the remaining tenure of the loans, given the uncertainty surrounding potential impact of the Consumer Credit Act, subsidy rationalisation and inflationary pressures.

We evaluated the transaction’s cashflow performance under various stress scenarios, including rapid amortisation triggered by breaches of the required minimum collection rates, maximum cumulative default rates or minimum overcollateralisation (OC) rates. While an OC ratio of 38.4% is needed to withstand cashflow stresses consistent with an AA₂ rating, Poseidon will issue additional Junior MTN and acquire further receivables to lift the ratio to 45% at issuance. This is intended to support Junior MTN coupon payments, which are subject to the Issuer registering a post-payment OC rate of at least 45% and maintaining required reserve balances. During rapid or controlled amortisation, Junior MTN coupon payments will be suspended until all Senior MTNs are fully redeemed.

The assigned rating reflects our review of draft transaction documents, which were found to be satisfactory, and our expectation that final documents will have no significant changes. RAM will monitor the transaction through monthly performance reports from the Servicer and Security Trustee and keep the rating under surveillance for as long as rated notes remain outstanding.

 

Analytical contacts
L Nurisya Abdullah
(603) 3385 2492
nurisya@ram.com.my

Lim Chern Yit
(603) 3385 2528
chernyit@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.

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Similarly, the disclaimers above also apply to RAM Ratings’ credit-related analyses and commentaries, where relevant.

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