[RAM] RAM Ratings assigns preliminary ratings to Tranche 10 Sukuk to be issued by RCE Marketing's financing vehicle, Zamarad

RAM Ratings has assigned respective preliminary ratings of AAA/Stable and AA₂/Stable to Zamarad Assets Berhad’s (Zamarad or the Issuer) Tranche 10 RM105.0 mil Class A Sukuk and RM20.0 mil Class B Sukuk (the Sukuk). This is the tenth issuance under Zamarad’s RM2.0 bil Sukuk Murabahah Programme, sponsored by RCE Marketing Sdn Bhd (RCEM or the Originator). 

As with Zamarad’s Tranches 6 to 9 Sukuk, Tranche 10 will include a Revolving Option (RO) which allows the Issuer to utilise excess cash in the transaction to acquire new receivables from RCEM, subject to fulfilling certain conditions. Our current assessment for Tranche 10 however assumes that the RO will not be exercised throughout the Sukuk’s tenure. Under the transaction terms, the Issuer can only exercise the RO if it does not have any adverse impact on the Sukuk’s ratings. 

Tranche 10, like previous Zamarad tranches, will be collateralised by personal financing (PF) facilities extended to civil servants, originated by RCEM through its business partner. The PF will be repaid by way of non-discretionary salary deductions processed by Angkatan Koperasi Kebangsaan Malaysia Berhad (Angkasa), an apex cooperative. The compulsory deductions, coupled with the low attrition rate in the civil service, moderate the credit risks of the PF receivables.

The Tranche 10 Sukuk will be backed by a portfolio of PF receivables with an outstanding principal balance of RM145.08 mil, based on the cut-off date of 31 July 2024, and a prefunded cash reserve of RM2.87 mil in the Finance Service Reserve Account at issuance. The resultant overcollateralisation ratios of 38.17% and 16.06% for the Class A and B Sukuk, respectively, provide sufficient credit support to mitigate cash flow losses due to defaults and prepayment rates assumed under AAA and AA₂ stress scenarios.

In assessing the adequacy of credit support, we have maintained our base-case assumptions of 0.09% for monthly net default rate and low and high prepayment rates of 0.035% and 0.80%. Stress scenarios applied in our rating analysis are similar to those employed for all tranches issued under Zamarad and Al Dzahab Assets Berhad – another RCEM-sponsored vehicle. 


Analytical contacts
Joel Thum
(603) 3385 2517
joel@ram.com.my

Lim Chern Yit
(603) 3385 2528
chernyit@ram.com.my

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