MARC has withdrawn its AA rating on Aegis One Berhad’s (Aegis One) RM900.0 million senior secured bonds (senior bonds) following confirmation that the bonds were fully redeemed on November 30, 2007. Meanwhile, the B-rated RM100.0 million subordinated secured bonds (subordinated bonds) remain outstanding.

Since the transaction was originated in 2002, the collateral pool experienced a total of three defaults with one obligor making a RM13.0 million partial repayment of its RM25.0 million loan principal on November 30, 2007. The obligor has submitted a proposal for repayment of its remaining RM12.0 million outstanding loan for portfolio manager review and bondholders’ consideration. MARC understands that there have been no recoveries to date in respect of the other two loan defaulters and the subordinated bondholders are resorting to legal action.

As of December 4, 2007, the servicer confirmed the cash balance in the designated accounts of RM35.5 million.  MARC was made to understand that an Extraordinary General Meeting (EGM) may be called on December 7, 2007 to discuss amongst others, a further extension in the redemption date to December 28, 2007. The subordinated bondholders had earlier extended the redemption date of the subordinated bonds to December 11, 2007. The subordinated bondholders have also agreed to set aside a sum of RM800,000 to support future recovery actions.

Aegis One is a bankruptcy remote special-purpose company incorporated in Malaysia, established for the primary purpose of undertaking this primary collateralised loan obligation (CLO) programme. Upon 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 by the originator.

MARC will issue a further update on the status of the subordinated bonds subsequent to the EGM.