Aman Sukuk Bhd - 2014

MARC has affirmed its AAAIS rating on special purpose vehicle Aman Sukuk Berhad’s (Aman) Islamic Medium-Term Notes (IMTN) programme of up to RM10.0 billion with a stable outlook. The rating action affects RM6,610.0 million IMTNs in six series issued by Aman under the programme as at November 25, 2014.

The affirmed rating is premised on the assured and sufficient sublease rental payments from the Government of Malaysia (GoM) as the sole paymaster to meet the principal and profit payments under the IMTN programme. The irrevocability of the sublease rental agreements between GoM and Aman’s parent Pembinaan BLT Sdn Bhd (PBLT), a wholly-owned entity of the GoM, is a key rating factor. PBLT has undertaken to develop and construct Polis DiRaja Malaysia (PDRM) police quarters and facilities under a build, lease and transfer project model (BLT). In the transaction structure, the IMTNs can only be issued for completed projects for which the sublease rental payments from GoM to PBLT have been assigned to Aman. The quantum of sublease rentals is structured to meet the repayment profile of each series of IMTN issued.

MARC notes that the transaction structure eliminates construction risk while commingling risk is addressed by having all sublease payments routed into a security account jointly maintained by the security agent and the issuer without passing through PBLT's bank accounts. As at end-June 2014, PBLT has completed 93.3% of the total project value of RM7,499.2 million; of the total 74 projects, 69 projects have received Certificates of Completion and Compliance (CCC). Aman has redeemed RM170.0 million (Tranche 1) and RM180.0 million (Tranche 7) under Series 1 of the programme in February and October 2014 respectively. The next redemptions of RM50.0 million under Series 3 and RM140.0 million under Series 4 will fall due in April 2015 and July 2015 respectively. MARC deems the cash balance in the company’s security accounts to be sufficient to meet the scheduled payments under each series of issuance.

The stable outlook reflects MARC's expectations that the sublease rentals backing the transaction will continue to be supported by GoM with timely receipt of funding allocations.

Major Rating Factors

Strengths

• Assured and sufficient sublease rental payments from the government to meet obligations; and 
• Irrevocability of sublease obligations of the government.