The proposed 10-year Medium-Term Notes (“MTN”) programme represents a structured transaction involving the assignment of contract proceeds due from Syarikat Perumahan Negara Berhad (“SPNB”), wholly owned by the Ministry of Finance Incorporated, to the Issuer, Tirai Impresif Sdn Bhd (“Tirai”); in respect of two contracts to supply and install roof tiles and galvanized iron roof trusses for SPNB’s Skim Rumah Mesra Rakyat (“Skim RMR”) and Skim Rumah Mampu Milik (“Skim RMM”). Accordingly, MARC has assigned a long-term rating of AA- to Tirai’s MTN with a nominal amount of up to RM100.0 million. The proceeds of the MTN will be utilised as working capital for the supply, installation and distribution process involved in undertaking the contracts. The MTN programme can also be utilised to finance working capital requirements of contracts awarded by Government of Malaysia (“GOM”) obtained by VTI Vintage Berhad (“VVB”), the ultimate holding company of Tirai, and its subsidiaries. For these other contracts to be eligible for financing under the MTN programme, MARC’s confirmation that these contracts will not negatively affect the rating of the MTN programme will be required.

The rating assigned reflects the tight issue structure which eliminates completion risks when undertaking the contracts and the strong credit profile of the off-taker SPNB. Specifically, the drawdown of the MTN is subject to completion of installation works, invoicing which is certified by SPNB and the assignment of the proceeds from these certified invoices to Tirai. In addition, MARC has also taken into account the strong projected cash flow position of the issuer, going forward, aided by the short credit term of 90 days given to SPNB against a 2-year maturity term for each MTN issued. 

Tirai is a single-purpose entity wholly owned by Vintage Roofing and Construction Sdn Bhd (“VRC”); which was set up to facilitate the issuance of the MTN. VRC, the operating arm and wholly owned subsidiary of VVB, will undertake the contracts for both the Skim RMR and Skim RMM. VVB as a group has positioned itself as a total roof solution provider, which involves the manufacture of roof trusses and tiles and the trading, supply and installation of roofing and roofing tiles.

Liquidity risk associated with the principle repayment of the MTNs issued for financing Skim RMR and Skim RMM is mitigated by the 90-day credit period given to SPNB for each invoice issued versus the 2-year maturity structure for each MTN and certain mechanisms imposed to restrict the outflow of funds from the Collection Account at the onset of the buffer period, 6 months before the maturity of each MTN. Payments will be made directly into a Collection Account at Tirai which will be charged in favour of the Trustee. The entire coupon payments for each MTN issue will be pre-funded from each issue proceeds via a Debt Service Account thereby eliminating liquidity risk.

During the tenure of the proposed MTN, Tirai’s cash flow position is anticipated to be strong; offering adequate protection to the note holders. From MARC’s sensitivity analysis, the issuer’s cash flow will be able to sustain a maximum 14% reduction in collection from SPNB.