RAM Ratings Reaffirms Sabah Credit Corporation's AA1/Stable/P1 Sukuk Ratings
RAM Ratings Reaffirms Sabah Credit Corporation's AA1/Stable/P1 Sukuk Ratings
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- 6 /23/2016 Latest Announcement - (News ID : 2016062300014) Latest Announcement News ID : 2016062300014 Subject : Sabah Credit Corporation Sabah Credit Corporation Organisation Name: RAM RATING SERVICES BERHAD News Type: RATING ANNOUNCEMENT Reference Site: None Embargo Date: 23/06/2016 Embargo Time: 03:21 PM Expiry Date: 23/07/2016 Priority: Medium Summary: RAM Ratings reaffirms Sabah Credit Corporation's AA1/Stable/P1 sukuk ratings 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=2016062300014&mode=DISPLAY&info=NEWS&screenId=PB010400 1/2
- 6 /23/2016 Latest Announcement - (News ID : 2016062300014) RAM Ratings has reaffirmed the AA1/Stable/P1 ratings of Sabah Credit Corporation's (SCC or the Corporation) outstanding sukuk instruments. SCC is wholly owned by the State Government of Sabah, and operates under the purview of the Sabah State Ministry of Finance. The ratings mainly reflect our expectation of continued support from the State Government. This has been clearly demonstrated through the subordination of SCC's loans from the State Government to its debt securities, the conversion of such loans into share capital, the reinvestment of dividends and the extension of letters of support for the Corporation's debt securities. Personalfinancing facilities remained SCC's mainstay (96% of its financing) as at endDecember 2015. Almost all of these facilities, which are primarily extended to civil servants, are repaid via direct salary deductions, thereby containing the Corporation's credit risk. Meanwhile, SCC's residential property, project loans, and hirepurchase segments continued to contract as the Corporation wound down these legacy exposures. On the whole, financing growth decelerated further to 6.6% in FY Dec 2015 (FY Dec 2014: 9.4%), following the implementation of Bank Negara Malaysia's 10year cap on the tenures of new personalfinancing facilities in September 2013. Despite still being encumbered by legacy exposures, SCC's gross impairedfinancing (GIF) ratio had eased to 3.3% as at endDecember 2015 (endDecember 2014: 3.7%), thanks to increased reclassification and the recovery of impaired financing. Nonetheless, the Corporation's creditcost ratio remained elevated at 1.0% in FY Dec 2015 (FY Dec 2014: 1.0%), given its sizeable exposure to unsecured financing. Its GIF coverage ratio of 88.5% as at endDecember 2015 was also weaker than the banking industry's average of 96.2%. Although SCC's profit performance stayed healthy in FY Dec 2015, its pretax profit may be affected by the redistribution of interest income in the next few years, following the adoption of FRS139 as its interest recognition method. We also note that the Corporation has become increasingly more reliant on wholesale funding, thus exposing it to refinancing and liquidity risks. However, we anticipate ready funding and liquidity support from the State Government, if needed. SCC's gearing ratio stood at 4.2 times as at endDecember 2015, which is still deemed manageable. Media contact Choong Andrea (603) 7628 1115 andrea@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=2016062300014&mode=DISPLAY&info=NEWS&screenId=PB010400 2/2
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