MARC has downgraded its rating on PSSB Ship Management Sdn Bhd’s (PSM) RM40 million Bai’ Bithaman Ajil Islamic Securities (BAIS) to DID from BB-ID. The rating action reflects PSM’s failure to meet its December 15, 2009 scheduled RM5.0 million reduction of its outstanding Islamic commercial papers (ICP). Concurrently, MARC has removed PSM’s rating from MARCWatch Negative, where it was placed on December 9, 2009 to reflect heightened concerns over PSM’s ability to meet its obligations under the BAIS.

PSM is a special purpose funding vehicle established by PSSB Strategic Holdings Sdn Bhd to issue the BAIS. Annual charter income from a vessel deployed under the Royal Malaysian Navy’s training programme had previously funded the debt service on the BAIS. MARC had earlier highlighted a shortfall in PSM’s Debt Service Reserve Account (DSRA) in relation to its December 15 debt payment, which the rating agency now understands to be a result of unbudgeted repair and maintenance expenses.

The outstanding notes under the rated facility amount to RM20.0 million. MARC understands that PSM has recently commenced restructuring negotiations with the two bondholders.

Contacts:
Lee Mei Lin, 03-20902259/ meilin@marc.com.my;
Mac Lai Yew Weng, 03-20902280/ lyweng@marc.com.my