MARC has downgraded with a negative outlook the long-term ratings of Ambang Sentosa Sdn. Bhd.’s (ASSB) RM272 million and RM226 million of class B and class C Al-Bai Bithaman Ajil Islamic debt (BaIDS) asset-backed securities (ABS) facility from AID to BBB+ID and from A-ID to BBB ID respectively. The downgrades are based upon the prolonged construction delays experienced at the Taman Puncak Jalil development resulting in significantly lower progress receipts compared to projections. The delay has resulted in lower balances in the BaIDS Redemption Account which amounted to merely RM230,109 as at 2 February 2006. Taking into account the RM17.31 million in Escrow Account (EA) 2 and RM547,274 in Escrow Account 3 (as at 2 February 2006), there would be insufficient funds to redeem the outstanding RM272.0 million Class B and RM226 million Class C BaIDS maturing in July 2006 and July 2007 respectively. The rating downgrades are mitigated by a proposed refinancing exercise involving the issuance of private debt securities prior to the redemption date of Class B BaIDs on 28th July 2006. MARC will monitor the status of the refinancing exercise closely to assess whether further rating actions would be necessary prior to the redemption date.

IJM Construction Sdn. Bhd. was appointed the construction manager in June 2005 to kick start and complete the construction works at the Taman Puncak Jalil development site. However, having undertaken the required assessments and reappointment of sub-contractors, construction works only recommenced in the last quarter of 2005.

ASSB is a special purpose, bankruptcy-remote company incorporated in Malaysia for the purpose of purchasing from the originator, Maxisegar Sdn. Bhd. (MSB), the latter’s rights, title and interest in the balance of receivables under a selected pool of Sale and Purchase Agreements (SPAs) entered into between the originator and end-purchasers. The SPAs are in respect of the sale of residential and commercial units developed by MSB in Taman Puncak Jalil and Saujana Damansara. Purchase of receivables was funded via the issuance of the BaIDS by ASSB.

The outstanding BaIDS are backed by secured sales (i.e. assets) of approximately RM1,391.7 million, expressed in terms of assigned value, from the Taman Puncak Jalil project. The balance of unbilled works as at 31 January 2006 amounts to RM552.8 million representing more than one time cover over the outstanding primary BaIDs.

For the purpose of the securitisation transaction, the assets have been divided into three classes, based upon the status of end-financing facilities, if any, obtained by end-purchasers to settle the balance of the unit purchase price, on closing of the transaction. The assets are pooled together for the purpose of payments towards Class A, Class B and Class C BaIDs. With the redemption of Class A BaIDs, the remaining assets (Class A, Class B and Class C assets) are available to service the outstanding Class B and C BaIDs. Class A and class B assets are those where end-financing have been secured. As at 31 January 2006, approximately 98.1% of the securitised pool comprised of class A (82.75%) and class B assets (15.38%).

The unfavourable developments in the construction and property development industries have indeed affected the Taman Puncak Jalil development with construction falling behind schedule by almost twelve months. The Saujana Damansara development was not affected as the development was fully completed by 30th April 2005. As at 31 January 2006, the overall status of completion for Taman Puncak Jalil is 60.7% representing 1.9% increment from 30th April 2005. The remaining construction cost is funded by funds in EA 1 which amounted to RM40.76 million as at 2 February 2006. Both the balances in EA 1 and EA 2 were more than the required minimum under the terms of the issue structure.