MARC Assigns Ratings of AAAIS and AA+IS To Danajamin's Senior and Subordinated Sukuk Murabahah

Transcription

1. IB ​ ​Press​ ​Release​ ​Service Published​ ​on:​​ ​IslamicBanker.com​ ​Publications:​ ​https://www.islamicmarkets.com/publications MARC​ ​Assigns​ ​Ratings​ ​of​ ​AAAIS​ ​and​ ​AA+IS​ ​To Danajamin's​ ​Senior​ ​and​ ​Subordinated​ ​Sukuk Murabahah 23​ ​August​ ​2017 MARC​ ​has​ ​assigned​ ​ratings​ ​of​ ​AAAIS​ ​and​ ​AA+IS​ ​to​ ​Danajamin​ ​Nasional​ ​Berhad's​ ​(Danajamin) Senior​ ​and​ ​Subordinated​ ​Sukuk​ ​Murabahah​ ​respectively​ ​of​ ​up​ ​to​ ​RM2.0​ ​billion​ ​under​ ​a proposed​ ​sukuk​ ​programme.​ ​Concurrently,​ ​MARC​ ​has​ ​affirmed​ ​its​ ​insurer​ ​financial​ ​strength rating​ ​of​ ​AAA​ ​and​ ​counterparty​ ​credit​ ​ratings​ ​of​ ​AAA/MARC-1​ ​on​ ​Danajamin.​ ​The​ ​ratings​ ​carry​ ​a stable​ ​outlook. The​ ​ratings​ ​are​ ​driven​ ​by​ ​Danajamin's​ ​status​ ​as​ ​a​ ​government-owned​ ​financial​ ​guarantee insurer​ ​(FGI)​ ​with​ ​the​ ​key​ ​role​ ​of​ ​facilitating​ ​market​ ​accessibility​ ​to​ ​ringgit-denominated​ ​bond and​ ​sukuk​ ​issuers.​ ​Danajamin's​ ​stringent​ ​risk​ ​controls,​ ​conservative​ ​investment​ ​policy​ ​and strong​ ​liquidity​ ​position​ ​support​ ​the​ ​ratings.​ ​The​ ​one-notch​ ​rating​ ​differential​ ​between​ ​the​ ​Senior and​ ​Subordinated​ ​Sukuk​ ​Murabahah​ ​reflects​ ​the​ ​subordination​ ​of​ ​the​ ​latter​ ​to​ ​the​ ​senior obligations​ ​of​ ​Danajamin. Danajamin​ ​is​ ​currently​ ​setting​ ​up​ ​the​ ​sukuk​ ​programme​ ​to​ ​diversify​ ​its​ ​funding​ ​sources​ ​and capital​ ​base.​ ​The​ ​sukuk​ ​programme​ ​will​ ​provide​ ​Danajamin​ ​with​ ​an​ ​alternative​ ​funding​ ​platform should​ ​the​ ​need​ ​arise.​ ​Additionally,​ ​any​ ​issuance​ ​of​ ​Subordinated​ ​Sukuk​ ​will​ ​qualify​ ​as​ ​Tier​ ​2 capital​ ​instrument​ ​under​ ​Bank​ ​Negara​ ​Malaysia's​ ​risk-based​ ​capital​ ​(RBC)​ ​framework​ ​for insurers.​ ​MARC​ ​notes​ ​that​ ​the​ ​proposed​ ​sukuk​ ​programme​ ​is​ ​in​ ​line​ ​with​ ​Danajamin's​ ​internal capital​ ​adequacy​ ​assessment​ ​process​ ​(ICAAP)​ ​under​ ​its​ ​regulatory​ ​framework.​ ​As​ ​at​ ​end-March 2017,​ ​Danajamin's​ ​total​ ​equity​ ​stood​ ​at​ ​RM1.6​ ​billion​ ​excluding​ ​a​ ​callable​ ​capital​ ​of​ ​RM1.0 billion​ ​from​ ​the​ ​government.​ ​The​ ​FGI's​ ​capital​ ​adequacy​ ​ratio​ ​remains​ ​healthy,​ ​standing​ ​above 300%,​ ​higher​ ​than​ ​the​ ​minimum​ ​requirement​ ​of​ ​130%.​ ​Net​ ​leverage​ ​ratio,​ ​as​ ​measured​ ​by​ ​total net​ ​outstanding​ ​guarantee​ ​amount​ ​to​ ​total​ ​equity,​ ​stood​ ​at​ ​2.85​ ​times​ ​(end-2016:​ ​3.02​ ​times). MARC​ ​does​ ​not​ ​expect​ ​the​ ​ratio​ ​to​ ​rise​ ​significantly​ ​over​ ​the​ ​near​ ​term​ ​as​ ​portfolio​ ​growth​ ​is expected​ ​to​ ​be​ ​moderate. Danajamin's​ ​gross​ ​outstanding​ ​guarantee​ ​amount​ ​declined​ ​slightly​ ​to​ ​RM5.3​ ​billion​ ​as​ ​at end-June​ ​2017​ ​(end-2016:​ ​RM5.7​ ​billion).​ ​As​ ​at​ ​date,​ ​the​ ​FGI​ ​has​ ​approved​ ​several​ ​new issuances​ ​to​ ​add​ ​to​ ​its​ ​portfolio​ ​of​ ​22​ ​issuances;​ ​however,​ ​the​ ​addition​ ​of​ ​new​ ​issuances​ ​could be​ ​partly​ ​offset​ ​by​ ​early​ ​redemptions.​ ​In​ ​terms​ ​of​ ​sectoral​ ​exposures,​ ​property,​ ​and​ ​oil​ ​and​ ​gas accounted​ ​for​ ​22.0%​ ​and​ ​17.1%​ ​of​ ​gross​ ​outstanding​ ​guarantee​ ​amount​ ​respectively​ ​as​ ​at end-June​ ​2017.​ ​Danajamin​ ​mitigates​ ​this​ ​concentration​ ​risk​ ​through​ ​risk-sharing​ ​collaboration
2. IB ​ ​Press​ ​Release​ ​Service Published​ ​on:​​ ​IslamicBanker.com​ ​Publications:​ ​https://www.islamicmarkets.com/publications arrangements​ ​with​ ​financial​ ​institutions.​ ​The​ ​fronting​ ​amount​ ​for​ ​banks​ ​has​ ​increased​ ​from RM281.0​ ​million​ ​in​ ​2013​ ​to​ ​RM852.0​ ​million​ ​in​ ​1H2017,​ ​of​ ​which​ ​RM547.0​ ​million​ ​is​ ​related​ ​to the​ ​issuers​ ​in​ ​the​ ​property,​ ​and​ ​oil​ ​and​ ​gas​ ​sectors.​ ​This​ ​risk-sharing​ ​arrangement​ ​has​ ​resulted in​ ​a​ ​net​ ​combined​ ​guarantee​ ​amount​ ​of​ ​RM1.5​ ​billion​ ​for​ ​these​ ​two​ ​sectors. For​ ​2016,​ ​Danajamin's​ ​net​ ​earned​ ​premiums​ ​grew​ ​by​ ​4.0%​ ​y-o-y​ ​to​ ​RM89.9​ ​million​ ​due​ ​to higher​ ​net​ ​earned​ ​premiums​ ​from​ ​two​ ​new​ ​deals​ ​during​ ​the​ ​year.​ ​Coupled​ ​with​ ​a​ ​higher investment​ ​income​ ​due​ ​to​ ​improved​ ​investment​ ​yield,​ ​net​ ​profit​ ​rose​ ​by​ ​5.2%​ ​y-o-y​ ​to​ ​RM125.5 million.​ ​The​ ​increased​ ​investment​ ​yield​ ​during​ ​the​ ​year​ ​was​ ​partly​ ​due​ ​to​ ​a​ ​higher​ ​fixed​ ​deposit rate​ ​which​ ​had​ ​been​ ​locked​ ​in​ ​by​ ​Danajamin​ ​prior​ ​to​ ​the​ ​interest​ ​rate​ ​cut​ ​in​ ​July​ ​2016.​ ​For 1Q2017,​ ​net​ ​profit​ ​declined​ ​slightly​ ​to​ ​RM30.4​ ​million​ ​although​ ​full​ ​year​ ​earnings​ ​should​ ​improve slightly​ ​from​ ​the​ ​previous​ ​year​ ​provided​ ​the​ ​pending​ ​new​ ​deals​ ​are​ ​completed​ ​within​ ​the financial​ ​period. While​ ​MARC​ ​opines​ ​that​ ​the​ ​planned​ ​sukuk​ ​issuance​ ​in​ ​3Q2017​ ​could​ ​lead​ ​to​ ​negative​ ​carry arising​ ​from​ ​higher​ ​funding​ ​cost​ ​relative​ ​to​ ​investment​ ​income,​ ​any​ ​such​ ​loss​ ​is​ ​likely​ ​to​ ​be insignificant​ ​relative​ ​to​ ​its​ ​net​ ​profit.​ ​MARC​ ​understands​ ​that​ ​proceeds​ ​from​ ​the​ ​sukuk​ ​issuance will​ ​be​ ​largely​ ​invested​ ​in​ ​short-term​ ​money​ ​market​ ​deposits​ ​and​ ​low-risk​ ​assets.​ ​As​ ​at end-March​ ​2017,​ ​these​ ​assets​ ​accounted​ ​for​ ​84.9%​ ​of​ ​Danajamin's​ ​total​ ​investments​ ​of​ ​RM1.6 billion​ ​and​ ​the​ ​investment​ ​mix​ ​is​ ​expected​ ​to​ ​be​ ​maintained​ ​at​ ​the​ ​current​ ​level​ ​going​ ​forward. MARC​ ​views​ ​that​ ​this​ ​investment​ ​strategy​ ​will​ ​continue​ ​to​ ​underpin​ ​Danajamin's​ ​strong​ ​liquidity position. The​ ​stable​ ​outlook​ ​reflects​ ​MARC's​ ​expectation​ ​that​ ​government​ ​support​ ​to​ ​the​ ​financial guarantee​ ​insurer​ ​remains​ ​and​ ​that​ ​Danajamin's​ ​financial​ ​metrics​ ​will​ ​continue​ ​to​ ​be​ ​strong. Organisation​ ​Name: News​ ​Type: Malaysian​ ​Rating​ ​Corporation​ ​Berhad​ ​(MARC) RATING​ ​ANNOUNCEMENT Source: BNM​ ​Announcements Media​ ​Contact Joan​ ​Leong,​ ​+603-2717​ ​2934/​ ​joan@marc.com.my; Sharidan​ ​Salleh,​ ​+603-2717​ ​2954/​ ​sharidan@marc.com.my
3. IB ​ ​Press​ ​Release​ ​Service Published​ ​on:​​ ​IslamicBanker.com​ ​Publications:​ ​https://www.islamicmarkets.com/publications Disclaimer: This​ ​communication​ ​is​ ​provided​ ​by​ ​Malaysian​ ​Rating​ ​Corporation Berhad​ ​(MARC)​ ​on​ ​the​ ​basis​ ​of​ ​information​ ​believed​ ​by​ ​MARC​ ​to​ ​be accurate​ ​and​ ​reliable​ ​as​ ​derived​ ​from​ ​publicly​ ​available​ ​sources​ ​or provided​ ​by​ ​the​ ​rated​ ​entity​ ​or​ ​its​ ​agents.​ ​MARC,​ ​however,​ ​has​ ​not independently​ ​verified​ ​such​ ​information​ ​and​ ​makes​ ​no​ ​representation as​ ​to​ ​the​ ​accuracy​ ​or​ ​completeness​ ​of​ ​such​ ​information.​ ​Any assignment​ ​of​ ​a​ ​credit​ ​rating​ ​by​ ​MARC​ ​is​ ​solely​ ​to​ ​be​ ​construed​ ​as​ ​a statement​ ​of​ ​its​ ​opinion​ ​and​ ​not​ ​a​ ​statement​ ​of​ ​fact.​ ​A​ ​credit​ ​rating​ ​is not​ ​a​ ​recommendation​ ​to​ ​buy,​ ​sell,​ ​or​ ​hold​ ​any​ ​security.