Aegis One Bhd - 2003
|Report ID||2004||Popularity||1512 views 21 downloads|
|Report Date||Dec 2003||Product|
|Company / Issuer||Aegis One Bhd||Sector||Primary CLO|
MARC has affirmed the long-term ratings of Aegis One Bhd’s (Aegis One) RM900.0 million senior secured bonds and RM100.0 million subordinated secured bonds at AAA and BB respectively. This is premised on the affirmation of the weighted average rating of Aegis One’s portfolio of corporate loans at A- / BBB+; comfortable overcollateralization and interest coverage ratios; the adequacy of supervision of the corporate loans by the portfolio manager and the liquidity reserve equivalent to three months interest coverage of the senior bonds.
Aegis One is a bankruptcy remote special-purpose company incorporated in Malaysia, established for the primary purpose of undertaking this primary collateralized loan obligation (CLO) programme. On closing in November 2002, Affin Bank Bhd (Affin Bank) as the originator transferred its rights, title and interest in, to and under a pre-identified portfolio of corporate loans to Aegis One. The transaction is structured as a true sale of the corporate loans portfolio from the originator. As this is a primary CLO, none of the corporate loans in the pre-identified portfolio were direct transfers from Affin Bank’s books.
Of the total portfolio of 25 underlying corporate loans securitized, Aegis One has seen a total of two upgrades and two downgrades during the year under review, with each of the affected obligor experiencing a single notch rating movement respectively. These rating migrations arose from the A- and BBB+ rating categories, with both categories posting one upgrade and one downgrade each.
Despite a marginal increase in portfolio exposure to credits rated BBB, the portfolio of corporate loans nonetheless remained predominantly skewed towards credits rated A- and above, which collectively represents 52.5% (on closing : 53.0%) of the total portfolio exposure. With this, the portfolio’s weighted average rating remained at A- / BBB+.
Furthermore, apart from the rating movements, Aegis One also experienced a positive change in its industry concentration following the change in principal activity of an obligor from industrial to banking and finance.
As at end November 2003, Aegis One’s overcollateralization (OC) ratio stood at 111.11%, above the required minimum of 105.00%. The interest coverage (IC) ratio as of the same date stood at 152.84%, also higher than the required minimum of 120.00%. The liquidity reserve account balance has been built up to RM11.7 million, representing a three months interest coverage on the senior bonds, as required under the terms of the transaction.