MARC has downgraded the long term ratings of Kerisma Berhad’s (Kerisma) RM870.0 million senior secured bonds and RM30.0 million mezzanine bonds from B to D and from C to D, respectively. The downgrade of the rating on the senior secured bonds reflect the failure to make full payment of outstanding principal on the senior secured bonds on the original scheduled maturity date of June 3, 2009.  MARC received confirmation from the facility agent that partial repayment of RM786.1 million was made to the senior bondholders representing 90.0% of the outstanding principal on the senior bond amount. The downgrade of the rating on the mezzanine bonds was premised on non-payment of principal at original scheduled maturity date.

In our press release pertaining to our last rating action on May 22, 2009, MARC had highlighted the heightened risk of non-payment by three obligors at original scheduled maturity of the loans on June 1, 2009. Since then, an Extraordinary General Meeting was held on June 3, 2009, at which the bondholders approved the extension of Kerisma’s bonds tenure for a further three months after the original scheduled maturity date to facilitate the recovery process. On June 3, 2009, out of the pool of 25 obligors, only 19 obligors made full payment while three obligors made partial payment totalling RM12.3 million (the unpaid principal of the three loans stands at RM117.7 million). No payments were received from the remaining three obligors which remained in default since our previous rating update.

Kerisma is a bankruptcy remote special-purpose company, established for the purpose of implementing and carrying out the primary CLO programme. At transaction close in June 2004, the originator, Alliance Investment Bank Bhd, transferred its rights, title and interests in a pre-identified RM1,000.0 million static portfolio of non-amortising five-year corporate loans with single bullet principal repayment to Kerisma. The transaction is structured as a true sale of newly-originated corporate loans portfolio from the originator. The proceeds from the issuance of the bonds were utilised to fund the purchase of the portfolio.

MARC expects to downgrade its C rating on the RM100.0 million subordinated bonds to D on its original stated maturity date of June 10, 2009.

Contacts:
Nadia Edmaz Abdul Hadi, 03-2090 2262/ nadia@marc.com.my;
Azlina Mohamed Noor Beg, 03-2090 2254/ azlina@marc.com.my;
Sandeep Bhattacharya, 03-2090 2247/ sandeep@marc.com.my