Musyarakah One Capital Bhd - 2009

MARC has affirmed Musyarakah One Capital Berhad’s (Musyarakah One) Sukuk Musyarakah Series 2005-A under its RM2,500 million Sukuk Musyarakah Programme at AAAIS. The outlook on the rating is stable. The affirmation is premised on the underlying credit strength of the Government of Malaysia (GOM) as the sole obligor under the supply contracts from which the receivables backing the sukuk arise. GOM’s timely and full redemption of maturing sukuk to date continues to support the rating.

Musyarakah One is a special purpose vehicle incorporated for the purpose of issuing sukuk musyarakah backed by existing government receivables purchased from TIME Systems Integrators Sdn. Bhd. (TSI). Under the programme, Musyarakah One may purchase, from time to time, government receivables generated from TSI’s supply contracts via an absolute legal assignment using proceeds from the issued sukuk musyarakah. The sukukholders are the beneficial owners of the receivables.

The receivables, consisting of the rights, title, interests and benefits to the GOM’s payment obligations to TSI are created pursuant to the delivery of equipment and services for teacing Science and Mathematics in English to identified schools and government-related concerns. Upon delivery of equipment and/or services, GOM will issue a Sijil Utama stating the contract sum payable as well as the payment schedule in respect of the contract sum. The Sijil Utama represents the GOM’s irrevocable and unconditional obligation to pay the agreed contract sum in accordance to schedule without any right of set-off or provision for acceleration in the event of default under the Programme. Consequently, the transaction is not exposed to the performance risk of TSI.

The two issuances under the Programme to date, the RM566.56 Sukuk Musyarakah Series 2005-A and RM103.62 million Sukuk Musyarakah Series 2005-B were structured to match the tenure and cash flows from the GOM under Sijil Utama 2005-A and Sijil Utama 2005-B respectively. Outstanding sukuk under Sukuk Musyarakah 2005-A amount to RM106.92 million, due in April 2010. No further sukuk issuances will be made under the Programme with the expiration of its availability period. Sukuk Musyarakah Series 2005-B was fully redeemed in 2007.

The stable outlook on the rating reflects MARC’s expectations that the receivables-backed transaction will continue to perform in line with the assigned rating.

Strengths

• Government of Malaysia as the sole obligor;
• Timely payment record for the receivables to date; and
• Elimination of performance risk as receivables are securitised subsequent to commissioning of the teaching equipment.