KUALA LUMPUR: RAM Rating Services Bhd has upgraded the long-term ratings of Golden Crop Returns Bhd's debt notes following the improved loan-to-value (LTV) ratios and debt service coverage ratios (DSCRs).
The ratings agency said on Wednesday, Dec 29 the ratings for series 2, 3, 4 and 5 Sukuk Al-Ijarah (Sukuk) were upgraded to AAA, AA2, AA3, and A1, respectively. Concurrently, the rating of Series 1 has been reaffirmed at AAA. All the long-term ratings have a stable outlook.
The rating upgrade was based on the improved LTV ratios and DSCRs of the transaction, following the redemption of the RM90 million tranche 2 sukuk on Nov 22.
'The stable outlook reflects our view that the securitised assets' performance will continue to fall within our expectations, thereby maintaining the LTV ratios and DSCRs at levels that commensurate with their ratings,' it said.
Golden Crop is a bankruptcy-remote, special-purpose company that had been set up as the financing vehicle for the sale-and-leaseback transaction involving 17 PLANTATION []s and 5 mills under the purview of entities within the BOUSTEAD HOLDINGS BHD [] group.
RAM Ratings said the redemption of the Tranche 2 Sukuk had resulted in the disposal of two estates and a mill by Golden Crop.
'The remaining 13 estates and 4 mills (collectively, the plantation assets) within the transaction continue to provide credit support for the RM242 million Tranche 3 Sukuk,' it said.
As at end-November, the cumulative LTV ratios stood at 34.3%, 42.8%, 52.9%, 57.2% and 64.4%, respectively, for the Series 1 to Series 5 Sukuk; the DSCRs for the same came up to a respective 3.2 times, 2.5 times, 2.0 times, 1.9 times and 1.7 times.
'The current LTV ratios and DSCRs are commensurate with the assigned ratings,' said RAM Ratings' head of structured finance ratings Siew Suet Ming.
The ratings agency said the disposal of the two estates was not expected to cause significant deviations in Golden Crop's overall yields of fresh fruit bunches (FFB).
Its FFB yield of 9.6 tonnes per hectare in the first half of 2010 was similar to that of the first half of 2009, and better than the industry average of 8.4 tonnes per ha for the same period.
'Going forward, we expect Golden Crop's estates to generate FFB yields of around 20 MT/ha per annum,' it said.
On the other hand, its overall plantation expenses were reduced to around RM3,984 per hectare in FY Dec 2009 (FY Dec 2008: RM4,502).
However, RAM Ratings said plantation costs were likely to rise over the medium term, pushed up by labour issues and higher fertilising expenses.
This was however, partially addressed by Boustead's initiatives of enhancing labour productivity via mechanisation and replanting with higher-yielding trees.
The ratings agency said on Wednesday, Dec 29 the ratings for series 2, 3, 4 and 5 Sukuk Al-Ijarah (Sukuk) were upgraded to AAA, AA2, AA3, and A1, respectively. Concurrently, the rating of Series 1 has been reaffirmed at AAA. All the long-term ratings have a stable outlook.
The rating upgrade was based on the improved LTV ratios and DSCRs of the transaction, following the redemption of the RM90 million tranche 2 sukuk on Nov 22.
'The stable outlook reflects our view that the securitised assets' performance will continue to fall within our expectations, thereby maintaining the LTV ratios and DSCRs at levels that commensurate with their ratings,' it said.
Golden Crop is a bankruptcy-remote, special-purpose company that had been set up as the financing vehicle for the sale-and-leaseback transaction involving 17 PLANTATION []s and 5 mills under the purview of entities within the BOUSTEAD HOLDINGS BHD [] group.
RAM Ratings said the redemption of the Tranche 2 Sukuk had resulted in the disposal of two estates and a mill by Golden Crop.
'The remaining 13 estates and 4 mills (collectively, the plantation assets) within the transaction continue to provide credit support for the RM242 million Tranche 3 Sukuk,' it said.
As at end-November, the cumulative LTV ratios stood at 34.3%, 42.8%, 52.9%, 57.2% and 64.4%, respectively, for the Series 1 to Series 5 Sukuk; the DSCRs for the same came up to a respective 3.2 times, 2.5 times, 2.0 times, 1.9 times and 1.7 times.
'The current LTV ratios and DSCRs are commensurate with the assigned ratings,' said RAM Ratings' head of structured finance ratings Siew Suet Ming.
The ratings agency said the disposal of the two estates was not expected to cause significant deviations in Golden Crop's overall yields of fresh fruit bunches (FFB).
Its FFB yield of 9.6 tonnes per hectare in the first half of 2010 was similar to that of the first half of 2009, and better than the industry average of 8.4 tonnes per ha for the same period.
'Going forward, we expect Golden Crop's estates to generate FFB yields of around 20 MT/ha per annum,' it said.
On the other hand, its overall plantation expenses were reduced to around RM3,984 per hectare in FY Dec 2009 (FY Dec 2008: RM4,502).
However, RAM Ratings said plantation costs were likely to rise over the medium term, pushed up by labour issues and higher fertilising expenses.
This was however, partially addressed by Boustead's initiatives of enhancing labour productivity via mechanisation and replanting with higher-yielding trees.
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