RAM Ratings puts Al Bayan's Rating on Rating Watch Negative
RAM Ratings puts Al Bayan's Rating on Rating Watch Negative
Arif, Mal
Arif, Mal
Transcription
- 10 /14/2016 Latest Announcement - (News ID : 2016101400024) Latest Announcement News ID : 2016101400024 Subject : ABHC Sukuk Berhad ABHC Sukuk Berhad Organisation Name: RAM RATING SERVICES BERHAD News Type: RATING ANNOUNCEMENT Reference Site: None Embargo Date: 14/10/2016 Embargo Time: 03:09 PM Expiry Date: 13/11/2016 Priority: Medium Summary: RAM Ratings puts Al Bayan's rating on Rating Watch Negative Attachments: No attachment available. Disclaimer: The user, including a user who is also a FAST Participant, expressly agrees that the use of this website which is accessible at https://fast.bnm.gov.my/ is at the user's sole risk. The information contained in this FAST website is compiled by MyClear Sdn. Bhd. (MyClear) and is provided on an "as is" basis without any representations or warranties of any kind, either expressed or implied. While MyClear makes every effort to ensure that information contained in the FAST website are accurate and disseminated in a timely and efficient manner, the user acknowledges that delays, errors, omissions or inaccuracies may occur. MyClear disclaims any liability pertaining to the consequences of any delays, errors, omissions or inaccuracies arising out of or relating to the FAST website or information, including but not limited to, any decision made or action taken by a user in reliance upon such information, or for damages suffered, whether direct, consequential, special, punitive, indirect or otherwise, notwithstanding having been advised of the possibility of such damages. In the event of any dispute, the official records of MyClear shall prevail. MyClear, Bank Negara Malaysia or any of its affiliates, officers, directors, agents or any other party involved in creating, producing or delivering the FAST website, shall not be liable for any direct, consequential, special, punitive, indirect, incidental or other damages arising out of or in any way connected with the use or inability to use the FAST website or information, whether based on contract, tort, liability or otherwise, even if advised on the possibility of any such damages. Content https://fast.bnm.gov.my/fastweb/public/PublicInfoServlet.do?chkBox=2016101400024&mode=DISPLAY&info=NEWS&screenId=PB010400 1/2
- 10 /14/2016 Latest Announcement - (News ID : 2016101400024) The Press Release was Published on 13 October 2016 RAM Ratings has placed the A1(s) rating of the RM1.0 billion Sukuk Wakalah (2013/2023) issued by Al Bayan Holding Company (Al Bayan or the Group) through its specialpurpose vehicle, ABHC Sukuk Berhad (ABHC), on Rating Watch with a negative outlook. The Group had not met the minimum required balance in the Finance Service Reserve Account (FSRA) in relation to the total RM100 million outstanding on the sukuk, which matures on 16 December 2016. Further, we have not been able to clarify the breach with Al Bayan. Al Bayan has up to 16 October 2016 to remedy the said breach. If the shortfall in the FSRA remains unrectified and we are unable to seek satisfactory clarification on the Group's liquidity position, the rating is likely to face a multinotch downgrade. Subsequently, if we are still unable to obtain critical information and clarification to undertake a meaningful assessment of Al Bayan's credit position, the rating of the sukuk programme may be suspended. The rating of the sukuk programme was recently downgraded to A1(s)/Stable from AA3(s)/Stable. As previously highlighted, we view Al Bayan's liquidity as pressured, with shortterm debts rising substantially to fund hefty working capital requirements following delayed collections from government projects. In addition, we are cautious of the construction sector facing an increasing risk of tight credit from financial institutions, given the Kingdom of Saudi Arabia's weaker fiscal position as well as pervasive delays in progress payments and a general downtrend in projects in the sector. We believe the receivables collection period for government contracts has lengthened beyond expectation, resulting in a significant deterioration in Al Bayan's liquidity position. Al Bayan is a familyowned Saudibased conglomerate with businesses mainly in the specialist construction of public infrastructure and supply of a wide range of equipment, IT products and services, primarily servicing the Government. Under a Kafalah agreement in favour of ABHC, the Group provides an irrevocable and unconditional guarantee to the holders of the sukuk. As such, the enhanced rating of the sukuk is based on the Group's credit profile. RAM Ratings' Rating Watch highlights a possible change in an issuer's debt rating. It focuses on identifiable events such as mergers, acquisitions, regulatory changes and operational developments that place a rated debt under special surveillance by RAM Ratings. In a broader sense, it covers any event that may result in changes in the risk factors relating to the repayment of principal and interest. Issues will appear on RAM Ratings' Rating Watch when some of the above events are expected to or have occurred. Appearance on RAM Ratings' Rating Watch, however, does not inevitably mean that the rating will be changed. It only means that a rating is under evaluation by RAM Ratings and a final affirmation is expected to be announced. A "positive" outlook indicates that a rating may be raised while a "negative" outlook indicates that a rating may be lowered. A ''developing'' outlook refers to those unusual situations in which future events are so unclear that the rating may potentially be raised or lowered Meanwhile, the suspension of a rating signifies that the rating of the affected issue has been ''put on hold''. As a rating entails a specific definition and indicates a particular level of credit worthiness, a suspended rating implies that RAM Ratings is no longer in a position to form an opinion on the repayment aptitude of the particular issuer in a meaningful manner. Analytical contact Media contact Ben Inn Padthma Subbiah (603) 7628 1024 (603) 7628 1162 ben@ram.com.my padthma@ram.com.my The credit rating is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment on the security's market price or its suitability for a particular investor, nor does it involve any audit by RAM Ratings. The credit rating also does not reflect the legality and enforceability of financial obligations. RAM Ratings receives compensation for its rating services, normally paid by the issuers of such securities or the rated entity, and sometimes third parties participating in marketing the securities, insurers, guarantors, other obligors, underwriters, etc. The receipt of this compensation has no influence on RAM Ratings' credit opinions or other analytical processes. In all instances, RAM Ratings is committed to preserving the objectivity, integrity and independence of its ratings. Rating fees are communicated to clients prior to the issuance of rating opinions. While RAM Ratings reserves the right to disseminate the ratings, it receives no payment for doing so, except for subscriptions to its publications. Similarly, the disclaimers above also apply to RAM Ratings' creditrelated analyses and commentaries, where relevant. Published by RAM Rating Services Berhad © Copyright 2016 by RAM Rating Services Berhad https://fast.bnm.gov.my/fastweb/public/PublicInfoServlet.do?chkBox=2016101400024&mode=DISPLAY&info=NEWS&screenId=PB010400 2/2
Create FREE account or Login to add your comment