KUALA LUMPUR: RAM Ratings has reaffirmed the AAA/P1 ratings of Rantau Abang Capital Berhad's (RACB) RM3 billion Islamic Commercial Papers/Medium-Term Notes Programme.
At the same time, the AAA rating of its RM7 billion Islamic Medium-Term Notes Programme has also been reaffirmed. Both long-term ratings have a stable outlook. The debt instruments are collectively known as 'the Sukuk Musharakah'.
Below is the statement from RAM Rating Bhd issued on Monday, Oct 11.
Under the transaction, a Musharakah partnership had been established between Khazanah Nasional Berhad and RACB; the capital returns and periodic profit payments on the Sukuk Musharakah stem from an investment portfolio consisting of Shariah-approved shares and assets owned by Khazanah Nasional Berhad (Khazanah or the Company). The ratings of the Sukuk Musharakah ultimately reflect the credit strength of Khazanah, in its capacity as the Purchase Undertaking Obligor; the Company will purchase the specific portfolio units from RACB at a pre-agreed price upon maturity or a dissolution event.
'Khazanah's credit profile predominantly hinges on its strategic position as the investing arm of the Malaysian Government, from which Khazanah derives superior financial flexibility in terms of access to the capital markets and the quality of its diversified portfolio,' points out Siew Suet Ming, RAM Ratings' Head of Structured Finance Ratings. As the investment arm of the Government of Malaysia (GoM), Khazanah has received various forms of government support. In line with the second stimulus package, Khazanah is the beneficiary of the GoM's planned RM10 billion injection over 3 years, to be invested in key domestic assets.
Khazanah's debt-servicing aptitude is primarily supported by dividend receipts, equity divestments and to, a smaller extent, refinancing. Meanwhile, we note that Khazanah's financial performance has been trending downwards. Although Khazanah was able to reap higher gains from divestments in FYE 31 December 2009 (FY Dec 2009), nonetheless, the Company's revenue and net profit declined along with its dividend income, which accounted for 57.17% of its revenue (FY Dec 2008: 79.69%). Coupled with provision of allowance for impairment losses, Khazanah's net profit fell 46.76% to RM640.71 million last year (FY Dec 2008: RM1.20 billion).
Moreover, the Company's balance sheet has a reasonably high level of borrowings at RM36.40 billion as at end-December 2009 (end-December 2008: RM33.14 billion). At the same time, its gearing and net debt-to-asset ratios stood at 1.95 and 0.59 times, respectively (end-December 2008: 1.83 times and 0.61 times). The Company recently issued a SGD1.5 billion (RM3.6 billion) sukuk to partially finance the acqusition of Parkway Holdings Ltd, one of Asia's leading provider of healthcare services. In view of the GoM's planned RM10 billion injection over the 3 next years, Khazanah's gearing levels should taper off accordingly.
Between 2007 and 2009, Khazanah had progressed to stage 2 of its transformation cycle, emphasising new projects and investments as its government-linked-companies transformation programme came to fruition on the domestic front. Elsewhere, Khazanah's overseas investment decisions are mainly in sectors that enables its stable of investments to leverage on foreign expertise and partnerships that can subsequently be 'reinvested' in the domestic sector. Given the long gestation periods of such projects, however, Khazanah's financial position is expected to remain subdued over the short-term until the returns from these investments can be realised.
At the same time, the AAA rating of its RM7 billion Islamic Medium-Term Notes Programme has also been reaffirmed. Both long-term ratings have a stable outlook. The debt instruments are collectively known as 'the Sukuk Musharakah'.
Below is the statement from RAM Rating Bhd issued on Monday, Oct 11.
Under the transaction, a Musharakah partnership had been established between Khazanah Nasional Berhad and RACB; the capital returns and periodic profit payments on the Sukuk Musharakah stem from an investment portfolio consisting of Shariah-approved shares and assets owned by Khazanah Nasional Berhad (Khazanah or the Company). The ratings of the Sukuk Musharakah ultimately reflect the credit strength of Khazanah, in its capacity as the Purchase Undertaking Obligor; the Company will purchase the specific portfolio units from RACB at a pre-agreed price upon maturity or a dissolution event.
'Khazanah's credit profile predominantly hinges on its strategic position as the investing arm of the Malaysian Government, from which Khazanah derives superior financial flexibility in terms of access to the capital markets and the quality of its diversified portfolio,' points out Siew Suet Ming, RAM Ratings' Head of Structured Finance Ratings. As the investment arm of the Government of Malaysia (GoM), Khazanah has received various forms of government support. In line with the second stimulus package, Khazanah is the beneficiary of the GoM's planned RM10 billion injection over 3 years, to be invested in key domestic assets.
Khazanah's debt-servicing aptitude is primarily supported by dividend receipts, equity divestments and to, a smaller extent, refinancing. Meanwhile, we note that Khazanah's financial performance has been trending downwards. Although Khazanah was able to reap higher gains from divestments in FYE 31 December 2009 (FY Dec 2009), nonetheless, the Company's revenue and net profit declined along with its dividend income, which accounted for 57.17% of its revenue (FY Dec 2008: 79.69%). Coupled with provision of allowance for impairment losses, Khazanah's net profit fell 46.76% to RM640.71 million last year (FY Dec 2008: RM1.20 billion).
Moreover, the Company's balance sheet has a reasonably high level of borrowings at RM36.40 billion as at end-December 2009 (end-December 2008: RM33.14 billion). At the same time, its gearing and net debt-to-asset ratios stood at 1.95 and 0.59 times, respectively (end-December 2008: 1.83 times and 0.61 times). The Company recently issued a SGD1.5 billion (RM3.6 billion) sukuk to partially finance the acqusition of Parkway Holdings Ltd, one of Asia's leading provider of healthcare services. In view of the GoM's planned RM10 billion injection over the 3 next years, Khazanah's gearing levels should taper off accordingly.
Between 2007 and 2009, Khazanah had progressed to stage 2 of its transformation cycle, emphasising new projects and investments as its government-linked-companies transformation programme came to fruition on the domestic front. Elsewhere, Khazanah's overseas investment decisions are mainly in sectors that enables its stable of investments to leverage on foreign expertise and partnerships that can subsequently be 'reinvested' in the domestic sector. Given the long gestation periods of such projects, however, Khazanah's financial position is expected to remain subdued over the short-term until the returns from these investments can be realised.
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