[RAM] RAM Ratings affirms Zamarad's Tranche 2, 3, 5, 8 and 9 sukuk ratings

RAM Ratings has affirmed the ratings of Zamarad Assets Berhad’s Tranche 2, 3, 5, 8 and 9 Sukuk Murabahah (see table). Zamarad is a special-purpose vehicle incorporated to undertake the securitisation of personal financing (PF) facilities extended to civil servants, originated through the business partners of RCE Marketing Sdn Bhd.



 

The rating affirmations reflect the underlying receivables’ favourable default and prepayment performances relative to our assumptions, which provide credit support commensurate with the respective ratings of all tranches under review. We expect these trends to continue going forward in view of non-discretionary salary deductions through which the PF is repaid and low attrition rates in the civil service.

Specific to Zamarad’s Tranches 8 and 9, the terms of which include Revolving Options (ROs), we expect the utilisation of excess cash reserves for the purchase of new receivables, if any, to keep credit support adequate for the respective AAA and AA2 ratings of the Class A and Class B Sukuk. Under the transaction terms, any exercise of the RO should not have an adverse impact on existing ratings.

During the review period, all the securitised portfolios backing the respective tranches saw no major deterioration in overall asset quality despite some spikes in monthly default rates. These fluctuations were mainly due to collection timing or administrative delays during festive seasons which were remedied in the subsequent month. 

While prepayments for the Tranche 8 and 9 Sukuk hovered closer to our low prepayment assumptions, those for the remaining tranches under review trended higher y-o-y, although still within our expectations. The elevated prepayment levels were mainly attributed to strong customer demand for refinancing to manage rising costs of living. For Tranches 8 and 9, we expect prepayment rates to gradually rise over time as the PF contracts become more seasoned. In the near term, upcoming civil servant salary adjustments may result in higher prepayments.  


Analytical contacts
Sean Lim, CFA
(603) 3385 2550
sean@ram.com.my

Zachary Tan
(603) 3385 2612
zachary@ram.com.my

Media contact
Sakinah Arifin
(603) 3385 2500
sakinah@ram.com.my