MARC affirms ‘AAA’ rating for Aman Sukuk’s RM10b MTN

PETALING JAYA: The Malaysian Rating Corp Bhd (MARC) has affirmed its ‘AAA’ rating on special purpose vehicle Aman Sukuk Bhd’s (Aman) Islamic medium-term notes (IMTN) programme of up to RM10 billion with a stable outlook.
In a statement last Friday, MARC said the rating reflects the credit strength of the government as the sole paymaster of the sublease rental payments that are sufficient to meet the principal and profit payments under the IMTN programme.
The rating agency added the stable outlook reflects its expectations that the sublease rental stream backing the transaction will continue to be supported by timely receipt of payments from the government.
Aman is a wholly owned funding vehicle of Pembinaan BLT Sdn Bhd (PBLT), the developer of 74 projects comprising quarters and facilities for the Polis DiRaja Malaysia.
The projects, which are located throughout the country, were developed under a build, lease and transfer (BLT) project model.
As at end of August 2016, PBLT has fully completed the construction of the 74 projects with a value of RM7.5 billion, of which 73 projects have been awarded with certificates of completion and compliance (CCC).
PBLT expects to receive the CCC for the final completed project by end-September 2016, MARC said.
Upon receipt of the CCCs, MARC said PBLT will enter into sublease rental agreements with the government, of which the proceeds from the IMTNs, which are issued in series, are used to acquire sublease rental receivables for the completed projects from PBLT.
“As the sublease rental payments are paid directly into the respective series’ security accounts, commingling risk is eliminated. The quantum of sublease rentals is also structured to meet the periodic repayment profile of each series for the IMTN issued,” it added.
As at end of August 2016, the outstanding IMTNs under the rated programme stood at RM6.3 billion.
Aman redeemed RM150 million (series 1) and RM130 million (series 5) notes in February and March 2016 respectively; the redemption of another RM185 million (series 2) will fall due in October this year.
MARC noted that the current cash balance of RM2 billion in the company’s security accounts as at end of August 2016 will be sufficient to meet the scheduled payments for the next three years under each series of issuance.