KUALA LUMPUR: Malaysian Rating Corp Bhd (MARC) has assigned a preliminary rating of AAA IS with a stable outlook to the Islamic Medium Term Notes (IMTN) Programme of up to RM10.0 billion by Aman Sukuk Berhad (Aman).
Aman is a special purpose vehicle established to facilitate the issuance of IMTNs on behalf of its parent, Pembinaan BLT Sdn Bhd (PBLT). PBLT, an entity wholly-owned by the Government of Malaysia (GoM), constructs facilities and quarters for the Royal Malaysia Police (Polis DiRaja Malaysia, or PDRM) under a Build, Lease and Transfer project model.
Below is the statement issued by MARC on Friday, Jan 14
The sukuk assets primarily consist of rights, entitlements and benefits to the sublease rental receivables under the sublease agreements pertaining to completed facilities constructed by PBLT for the PDRM. PBLT will dispose of its sukuk assets to Aman via legal assignments.
The proceeds from IMTNs issued under the programme will be used to finance development costs of various projects of PBLT, its operating expenses, financial costs and repayment of existing borrowings.
Each series of notes is essentially secured by and serviced from defined sublease rental payments made by the GoM pursuant to the terms of respective sublease agreements for identified completed facilities.
The repayment profile of the IMTN series will be structured to match the sublease payments made by the GoM under various facility leases and subleases to ensure full and timely servicing and repayment.
The sublease payments due on a particular sublease represent an independent obligation of the GoM; they are not affected by other existing and/or future subleases on other completed facilities and/or facilities to be completed by PBLT.
The assigned rating of AAAIS is based on the credit profile of single obligor and sublessee which is the GoM, given that its capacity to make the defined contractual sublease payments under the respective sublease agreements is derived from federal government annual budgetary allocations.
The rating also reflects the irrevocable nature of sublease payment obligations; the GoM cannot terminate the sublease agreements and is obliged to make the sublease payments under any circumstances.
The transaction structure eliminates commingling risk by ensuring that the GoM makes sublease payments directly into a collection account that will be jointly maintained by an appointed security agent and the issuer without passing through PBLT's bank accounts.
All operational risk related to the maintenance of the facilities has been transferred to the sublessee. Additionally, noteholders are insulated from PBLT's performance risk; the GoM has no right to set-off claims resulting from covenant breaches and impairment of the facilities against the sublease receivables.
MARC is satisfied that the originator's performance and credit profile is not a significant factor in this government sublease-receivables backed transaction.
Notwithstanding, MARC notes the federal government's commitment to provide PBLT full reimbursement of its costs and implied obligation to provide adequate financial support to a wholly-owned entity.
Aman is a special purpose vehicle established to facilitate the issuance of IMTNs on behalf of its parent, Pembinaan BLT Sdn Bhd (PBLT). PBLT, an entity wholly-owned by the Government of Malaysia (GoM), constructs facilities and quarters for the Royal Malaysia Police (Polis DiRaja Malaysia, or PDRM) under a Build, Lease and Transfer project model.
Below is the statement issued by MARC on Friday, Jan 14
The sukuk assets primarily consist of rights, entitlements and benefits to the sublease rental receivables under the sublease agreements pertaining to completed facilities constructed by PBLT for the PDRM. PBLT will dispose of its sukuk assets to Aman via legal assignments.
The proceeds from IMTNs issued under the programme will be used to finance development costs of various projects of PBLT, its operating expenses, financial costs and repayment of existing borrowings.
Each series of notes is essentially secured by and serviced from defined sublease rental payments made by the GoM pursuant to the terms of respective sublease agreements for identified completed facilities.
The repayment profile of the IMTN series will be structured to match the sublease payments made by the GoM under various facility leases and subleases to ensure full and timely servicing and repayment.
The sublease payments due on a particular sublease represent an independent obligation of the GoM; they are not affected by other existing and/or future subleases on other completed facilities and/or facilities to be completed by PBLT.
The assigned rating of AAAIS is based on the credit profile of single obligor and sublessee which is the GoM, given that its capacity to make the defined contractual sublease payments under the respective sublease agreements is derived from federal government annual budgetary allocations.
The rating also reflects the irrevocable nature of sublease payment obligations; the GoM cannot terminate the sublease agreements and is obliged to make the sublease payments under any circumstances.
The transaction structure eliminates commingling risk by ensuring that the GoM makes sublease payments directly into a collection account that will be jointly maintained by an appointed security agent and the issuer without passing through PBLT's bank accounts.
All operational risk related to the maintenance of the facilities has been transferred to the sublessee. Additionally, noteholders are insulated from PBLT's performance risk; the GoM has no right to set-off claims resulting from covenant breaches and impairment of the facilities against the sublease receivables.
MARC is satisfied that the originator's performance and credit profile is not a significant factor in this government sublease-receivables backed transaction.
Notwithstanding, MARC notes the federal government's commitment to provide PBLT full reimbursement of its costs and implied obligation to provide adequate financial support to a wholly-owned entity.
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