MARC has lowered both Dawama Sdn Bhd’s (Dawama) RM120.0 million Senior and RM20.0 million Junior Sukuk Musyarakah Medium Term Notes (MTN) Programme to CIS from BIS. The ratings were removed from MARCWatch Negative where they had been placed on February 18, 2011.

The lowered rating reflects the high likelihood of payment default on April 27, 2011 given the absence of positive developments pertaining to its liquidity position and negotiations with sukukholders since MARC’s last rating action on February 18, 2011. The rating agency had earlier cautioned about Dawama’s increased vulnerability to non-payment in light of its inability to meet scheduled sinking fund payments for its forthcoming RM20.0 million Senior Sukuk redemption due on April 27, 2011. Dawama’s outstanding obligations under the rated programme are limited to RM100.0 million of Senior notes and RM5.0 million of Junior notes.

The ‘C’ ratings will be lowered to ‘D’ or default on redemption date if Dawama fails to make its principal repayment on the Senior Sukuk.

Contacts:
Darrell Lim, 03-2082 2261/ darrell@marc.com.my;
Rajan Paramesran, 03-2082 2233/ rajan@marc.com.my.