[RAM] RAM Ratings assigns AA2 rating to SeaMoney Capital's Second Tranche Senior Class MTN to be issued by Poseidon

RAM Ratings has assigned an AA₂/Stable rating to the RM350.0 mil Second Tranche Senior Class Medium-Term Notes (Senior MTN) to be issued by Poseidon ABS Berhad (Poseidon or Issuer) under its RM3.5 bil perpetual asset-backed MTN programme. The Issuer is a trust-owned special-purpose vehicle (SPV) of SeaMoney Capital Malaysia Sdn Bhd (SCM), a leading digital finance services provider in Southeast Asia. The SPV facilitates the securitisation of Buy Now Pay Later (BNPL) receivables originated by SCM predominantly through Shopee e-commerce platform under its SPayLater service.

Proceeds of the Senior MTN, together with RM186.0 mil of unrated Junior MTN (collectively, the Second Tranche MTN), will fund the purchase of RM514.3 mil of eligible receivables from SCM for a purchase consideration of RM507.5 mil. Upfront programme expenses and required liquidity reserves will be prefunded by proceeds of the Junior MTN, which will be subscribed by an entity within SCM’s Group. The Junior MTN are subordinated to the Senior MTN in terms of payment priority and claims. 

Aside from tranche-specific terms such as rapid amortisation events and minimum required overcollateralisation (OC), expanded eligibility criteria, a shorter controlled amortisation period, and an additional early redemption option (see below), the Second Tranche MTN is largely similar to the first tranche rated by RAM in August 2023 (see press release here). The additional early redemption option can be exercised if there are insufficient available eligible receivables for purchase during the revolving period. 

The required initial OC rate of 38.4% provides adequate credit support that commensurate with an AA2 rating for the Senior MTN. We evaluated the transaction’s cashflow performance under various stress scenarios, including when rapid amortisation is triggered by breaches of minimum collection rates, maximum cumulative default rates or minimum OC rate requirements, among others. At issuance, however, the receivables purchased will result in a higher than required initial OC of 45.1%. This is to enable payment of Junior MTN coupons (at Issuer’s option) that is subject to the transaction meeting a post-payment minimum OC rate of 45% and reserve account balance requirements. During the rapid and controlled amortisation period, coupon payments on the Junior MTN will be prohibited until all Senior MTNs are fully redeemed.

We also reviewed SCM’s business strategy, updates to its credit underwriting and collection policies, and the historical loss performance of its BNPL static pools. Overall, we observed no material performance deviation since Poseidon’s First Tranche MTN was rated in August 2023. We have maintained our base-case net default rate assumption of 1.25% for the first month, followed by 0.6% per month for subsequent months of the loan’s remaining tenure.

The assigned rating is based on our satisfactory review of the draft transaction documents, and we do not anticipate any significant changes in the final versions. RAM will maintain surveillance of the transaction via monthly performance reports prepared by the Servicer and the Security Trustee and monitor the rating as long as there are outstanding rated notes under the programme.


Analytical contacts
L Nurisya Abdullah
(603) 3385 2492
nurisya@ram.com.my

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

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