Standard & Poor’s Global Ratings have affirmed credit ratings for Jordan Islamic Bank (JIB), namely B+ for long-term and B for short-term counterparty credit ratings and a stable outlook. JIB’s standalone credit profile (SACP) was assessed at BB-.
According to the ratings agency, JIB is weathering the COVID-19 pandemic well. JIB has been able to maintain its advanced market share and its leading position as the largest Islamic financial institution in Jordan and the country’s fourth-largest bank in terms of assets, with stable capital, a good record in financing, liquidity, achieving profits, Standard & Poor's Global Ratings said. The agency also noted that JIB has a wide and varied customer base, and has been flexible in managing its business and diversifying its investments.
Dr Hussein Said, CEO/GM of JIB, said: "Re-stabilising Standard & Poor's rating of our bank's credit ratings despite the negative effects of the spread of the corona pandemic and its negative effects on various sectors, praise be to God, the bank’s ability and success in managing and how to deal with this pandemic and its reflection on its performance, stressing the continuity of implementing the bank’s strategy to preserve the achievements made while striving to achieve more, enhance the bank’s position and expand its reach in the Jordanian market.
News & trends blog on the shari'ah economy in Asia Pacific/Middle East. Reporting from Singapore.
Showing posts with label Ratings. Show all posts
Showing posts with label Ratings. Show all posts
Friday, 23 October 2020
Saturday, 3 October 2020
Chellam Plantations' Sabah sukuk gets AAA(fg)/Stable rating from RAM
RAM Ratings has reaffirmed the AAA(fg)/Stable rating of the RM150 million 10-year tranche (2016/2026) under Chellam Plantations Sabah’s RM300 million Guaranteed Sukuk Murabahah Programme (2016/2033). The enhanced rating is premised on the irrevocable and unconditional guarantee extended by Danajamin Nasional (rated AAA/Stable/P1), the company said.
Chellam Plantations is an investment-holding company, with subsidiaries involved in the cultivation of oil palms and the milling of palm oil. Independent of the financial guarantee, its standalone credit profile is constrained by its relatively small planted area of 13,799 ha which can only contribute 30% of its processing capacity. Based on its capacity of 871,200 metric tonnes (MT) per annum, the group depends on processing fresh fruit brunches (FFBs) purchased from third parties in addition to its own FFBs. This strategy allows the group to pursue incremental profits despite thin margins. The Group’s oil extraction rate (OER), which stood at 22% in 2019, remains comparable to those of bigger regional players, RAM Ratings said.
While Chellam Plantations’ FFB output declined to 104,609 MT (4.1%) and 91,351 MT (12.7%) year-on-year in 2019 and 1H20, strong FFB growth momentum is expected in the medium term due to a large proportion of young and prime palms (overall weighted-average age: 11 years). Such palms constituted 77% of its total planted area as at end-December 2019.
Chellam Plantations’ production cost for crude palm oil (CPO) decreased to RM1,512 per MT in fiscal 2019 (fiscal 2018: RM1,650), thanks to lower average cost for external FFB purchases, in line with softer CPO prices. Lighter expenses and a higher mill utilisation rate boosted its operating profit before depreciation, interest, and tax (OPBDIT) and OPBDIT margins to a respective RM51.31 mil and 15.36% in fiscal 2019, despite lower revenue (-6.7%) of RM334.02 million.
"We anticipate Chellam Plantations’ topline to improve in fiscal 2020, underscored by healthier average CPO prices," RAM Ratings said in a statement.
Details:
Tuesday, 7 November 2017
Bank of Tokyo-Mitsubishi UFJ Malaysia gets AAA(bg)/Stable rating on sukuk wakalah
RAM Ratings has reaffirmed the AAA(bg)/Stable rating of the securities issued under Bank of Tokyo-Mitsubishi UFJ Malaysia (BTMU Malaysia) for a US$500 million Multi-Currency Sukuk Wakalah Bi Al-Istithmar Programme.
BTMU Malaysia is wholly owned by The Bank of Tokyo-Mitsubishi UFJ, itself rated AAA/Stable/P1 by RAM. Both belong to the Mitsubishi UFJ Financial Group (MUFG) - one of the world’s largest banking groups and also Japan’s leading banking group. The enhanced issue rating reflects the irrevocable and unconditional guarantee extended by BTMU on the sukuk wakalah issued under the programme, RAM Ratings said.
"The bank and its parent constitute part of the BTMU Malaysia’s ratings benefit from a strong likelihood of support from its parent. The ratings also reflect its robust capitalisation, superior loan quality and stable income-generating capacity," said RAM in a statement.
BTMU Malaysia’s loan base expanded 9% in the 15-month fiscal period ended 31 March 2017; the Bank recently changed its financial year-end from 31 December to 31 March. BTMU Malaysia’s loan portfolio is of superior quality as a result of its focus on the Malaysian-domiciled entities owned by established Japanese conglomerates, multinationals and highly-rated domestic names, RAM Ratings notes.
BTMU Malaysia is wholly owned by The Bank of Tokyo-Mitsubishi UFJ, itself rated AAA/Stable/P1 by RAM. Both belong to the Mitsubishi UFJ Financial Group (MUFG) - one of the world’s largest banking groups and also Japan’s leading banking group. The enhanced issue rating reflects the irrevocable and unconditional guarantee extended by BTMU on the sukuk wakalah issued under the programme, RAM Ratings said.
"The bank and its parent constitute part of the BTMU Malaysia’s ratings benefit from a strong likelihood of support from its parent. The ratings also reflect its robust capitalisation, superior loan quality and stable income-generating capacity," said RAM in a statement.
BTMU Malaysia’s loan base expanded 9% in the 15-month fiscal period ended 31 March 2017; the Bank recently changed its financial year-end from 31 December to 31 March. BTMU Malaysia’s loan portfolio is of superior quality as a result of its focus on the Malaysian-domiciled entities owned by established Japanese conglomerates, multinationals and highly-rated domestic names, RAM Ratings notes.
Wednesday, 15 June 2016
RAM Ratings says Tanjung Bin Power's sukuk ijarah programe continues to be stable
RAM Ratings has reaffirmed the AA2/Stable rating of Tanjung Bin Power's (TBP's) Sukuk Ijarah Programme of up to RM4.5 billion in nominal value (2012/2029) (the sukuk). The rating continues to reflect TBP's strong debt-coverage levels owing to robust cashflow generation and a well-matched debt-repayment profile. The rating is also supported by the company’s strong business profile, backed by the favourable terms of its power purchase agreement (PPA) with Tenaga Nasional (TNB), its sole off-taker.
TBP is an independent power producers (IPP) that has been granted the right to construct, own and operate a 2,100-MW coal-fired power plant in Tanjung Bin, Johor, under a PPA with TNB which expires on 27 September 2031.As with other IPPs, TBP remains exposed to regulatory and single-project risks, RAM Ratings says.
Following the progressive completion of the second phase of the power plant’s turnaround programme from July 2015 to February 2016, TBP had witnessed a notable operational improvement and claimed full available capacity payments (ACPs) and daily utilisation payments (DUPs) in fiscal 2015. In addition, the company managed to fully pass through its fuel cost to TNB.
Looking ahead, TBP’s credit metrics are expected to stay solid, with its minimum finance service coverage ratio (FSCR) standing at 1.65 times for the remaining tenure of the sukuk despite stress test assumptions of ACP and DUP losses in certain years. In RAM Ratings' assessment of its distribution policy, the company had represented to pay its subordinated debt obligations and dividends, subject to meeting financial covenants under the sukuk on a forward-looking basis, as opposed to only in the year of assessment.
TBP is an independent power producers (IPP) that has been granted the right to construct, own and operate a 2,100-MW coal-fired power plant in Tanjung Bin, Johor, under a PPA with TNB which expires on 27 September 2031.As with other IPPs, TBP remains exposed to regulatory and single-project risks, RAM Ratings says.
Following the progressive completion of the second phase of the power plant’s turnaround programme from July 2015 to February 2016, TBP had witnessed a notable operational improvement and claimed full available capacity payments (ACPs) and daily utilisation payments (DUPs) in fiscal 2015. In addition, the company managed to fully pass through its fuel cost to TNB.
Looking ahead, TBP’s credit metrics are expected to stay solid, with its minimum finance service coverage ratio (FSCR) standing at 1.65 times for the remaining tenure of the sukuk despite stress test assumptions of ACP and DUP losses in certain years. In RAM Ratings' assessment of its distribution policy, the company had represented to pay its subordinated debt obligations and dividends, subject to meeting financial covenants under the sukuk on a forward-looking basis, as opposed to only in the year of assessment.
Tuesday, 14 June 2016
RAM Ratings reconfirms ratings for HSBC Amanah Malaysia
RAM Ratings has reaffirmed the AAA/Stable/P1 financial institution ratings of HSBC Amanah Malaysia (the bank), as well as the AAA/Stable rating of the Bank’s RM3 billion Multi-Currency Sukuk Programme (2012/2032).
The ratings reflect the bank’s strategic importance as the Islamic banking arm of HSBC Bank Malaysia (rated AAA/Stable/P1 by RAM), and the rating firm's expectation of ready financial support if needed. HSBC Amanah has an established domestic franchise under the Amanah brand, and remains the largest locally incorporated foreign Islamic bank in Malaysia. The bank is also one of the two global hubs for HSBC Holdings’ Amanah network.
HSBC Amanah’s gross impaired-financing (GIF) ratio had climbed up to 1.9% as at end-December 2015 (end-December 2014: 1.5%), primarily due to the deterioration of its residential property facilities and financing for personal use. Although this may be partially due to the bank’s more conservative financing-classification policies, some deterioration in borrowers’ credit quality can also be observed. Nonetheless, the bank’s exposure to mid-to-higher-income consumers partly alleviates concerns of widespread increase in household delinquencies attributable to the rising cost of living.
As a consequence of the reclassification of its RM1.3 billion wakalah structured products to other liabilities, HSBC Amanah’s financing-to-deposits ratio had surged to 129% as at end-December 2015 (end-December 2014: 99%). However, we derive comfort from the ready funding support it enjoys from its parent and the bank’s strong liquidity profile as evinced by its high liquidity coverage ratio as at the same date. Meanwhile, the bank’s capitalisation remained strong, with a common-equity tier-1 capital ratio of 11.9% and a total capital ratio of 18.1% (end-December 2014: 11.8% and 15.1%). The boost in capitalisation is attributable to a RM250 million injection of tier-2 capital from its parent.
The ratings reflect the bank’s strategic importance as the Islamic banking arm of HSBC Bank Malaysia (rated AAA/Stable/P1 by RAM), and the rating firm's expectation of ready financial support if needed. HSBC Amanah has an established domestic franchise under the Amanah brand, and remains the largest locally incorporated foreign Islamic bank in Malaysia. The bank is also one of the two global hubs for HSBC Holdings’ Amanah network.
HSBC Amanah’s gross impaired-financing (GIF) ratio had climbed up to 1.9% as at end-December 2015 (end-December 2014: 1.5%), primarily due to the deterioration of its residential property facilities and financing for personal use. Although this may be partially due to the bank’s more conservative financing-classification policies, some deterioration in borrowers’ credit quality can also be observed. Nonetheless, the bank’s exposure to mid-to-higher-income consumers partly alleviates concerns of widespread increase in household delinquencies attributable to the rising cost of living.
As a consequence of the reclassification of its RM1.3 billion wakalah structured products to other liabilities, HSBC Amanah’s financing-to-deposits ratio had surged to 129% as at end-December 2015 (end-December 2014: 99%). However, we derive comfort from the ready funding support it enjoys from its parent and the bank’s strong liquidity profile as evinced by its high liquidity coverage ratio as at the same date. Meanwhile, the bank’s capitalisation remained strong, with a common-equity tier-1 capital ratio of 11.9% and a total capital ratio of 18.1% (end-December 2014: 11.8% and 15.1%). The boost in capitalisation is attributable to a RM250 million injection of tier-2 capital from its parent.
Sunday, 12 June 2016
RAM Ratings assigns final ratings to RCE-sponsored Tranche 1 sukuk
RAM Ratings has assigned final AAA/Stable and AA3/Stable ratings to Al Dzahab Assets' (the Issuer) RM95 million class A sukuk and RM25 million class B sukuk, respectively. This is the first issuance under Al Dzahab’s RM900 million sukuk murabahah asset-backed securitisation programme (the programme).
The issuance will be collateralised by personal-financing (PF) facilities originated by RCE Marketing (RCEM) through its business partners and extended to civil servants. These facilities are repaid via non-discretionary salary deductions processed by the Accountant General's Department and Angkatan Koperasi Kebangsaan Malaysia, thereby substantially insulating the transaction from the credit risks of the borrowers as long as they remain in active service.
RAM Ratings' cashflow assessment indicates that the underlying portfolio will be able to meet full and timely payment of the financial obligations of Tranche 1 under respective “AAA stress” and “AA3 stress” scenarios for the class A and class B sukuk. The class A sukuk and class B sukuk will be backed by receivables with an outstanding principal value of RM148.6 million and RM3.4 million of cash balances respectively, translating into corresponding over-collateralisation ratios of 60% and 26.66%.
Given the underlying portfolio’s weighted-average (WA) seasoning of only 1.21 years against a WA original tenure of 9.74 years, however, the actual performance of the portfolio as it seasons may deviate from our cashflow assumptions. Furthermore, the historical data reflect a benign period for the industry as a result of regulatory changes.
The transaction structure prioritises the financial obligations in respect of the class A and class B sukuk. Profit on the unrated class C sukuk are payable only after the full redemption of the rated classes. The minimum required balance in the Finance Service Reserve Account can only be utilised to top up any shortfall in meeting the profit obligations vis-à-vis the rated sukuk. In relation to Tranche 1, the issuer will pay fixed servicer fees without any servicer commission or bonus.
RAM Ratings believes that RCEM (as the servicer) is sufficiently “incentivised” to uphold its responsibilities in relation to Tranche 1, as the programme remains a long-term source of funding for the RCE Group. RCEM has been providing and servicing PF facilities for more than 10 years, and this transaction marks its fourth venture into the private debt market, which gives confidence to the conclusion.
Al Dzahab is a special-purpose vehicle incorporated to undertake the securitisation of receivables originated through the business partners of RCEM. Under the programme, the issuer will, from time to time, issue sukuk to fund its acquisition of PF portfolios. Stop-issuance trigger events prohibit further issuance under the programme should the servicer’s ability to perform its obligations – including servicing the PF facilities – become impaired.
The issuance will be collateralised by personal-financing (PF) facilities originated by RCE Marketing (RCEM) through its business partners and extended to civil servants. These facilities are repaid via non-discretionary salary deductions processed by the Accountant General's Department and Angkatan Koperasi Kebangsaan Malaysia, thereby substantially insulating the transaction from the credit risks of the borrowers as long as they remain in active service.
RAM Ratings' cashflow assessment indicates that the underlying portfolio will be able to meet full and timely payment of the financial obligations of Tranche 1 under respective “AAA stress” and “AA3 stress” scenarios for the class A and class B sukuk. The class A sukuk and class B sukuk will be backed by receivables with an outstanding principal value of RM148.6 million and RM3.4 million of cash balances respectively, translating into corresponding over-collateralisation ratios of 60% and 26.66%.
Given the underlying portfolio’s weighted-average (WA) seasoning of only 1.21 years against a WA original tenure of 9.74 years, however, the actual performance of the portfolio as it seasons may deviate from our cashflow assumptions. Furthermore, the historical data reflect a benign period for the industry as a result of regulatory changes.
The transaction structure prioritises the financial obligations in respect of the class A and class B sukuk. Profit on the unrated class C sukuk are payable only after the full redemption of the rated classes. The minimum required balance in the Finance Service Reserve Account can only be utilised to top up any shortfall in meeting the profit obligations vis-à-vis the rated sukuk. In relation to Tranche 1, the issuer will pay fixed servicer fees without any servicer commission or bonus.
RAM Ratings believes that RCEM (as the servicer) is sufficiently “incentivised” to uphold its responsibilities in relation to Tranche 1, as the programme remains a long-term source of funding for the RCE Group. RCEM has been providing and servicing PF facilities for more than 10 years, and this transaction marks its fourth venture into the private debt market, which gives confidence to the conclusion.
Al Dzahab is a special-purpose vehicle incorporated to undertake the securitisation of receivables originated through the business partners of RCEM. Under the programme, the issuer will, from time to time, issue sukuk to fund its acquisition of PF portfolios. Stop-issuance trigger events prohibit further issuance under the programme should the servicer’s ability to perform its obligations – including servicing the PF facilities – become impaired.
Sunday, 14 February 2016
Malaysia retains lead in global sukuk share in 2015
Malaysia has retained its leading position as a sukuk hub in 2015, accounting for 53% of global issuance at the end of the year, says RAM Ratings.
“This is a strong finish for Malaysia, which has had to contend with the devaluation of the ringgit, slower sukuk issuance and new issuers from other countries,” notes Ruslena Ramli, RAM Ratings’ Head of Islamic Finance.
Although the performance pales in comparison to the country’s 69% of share of global sukuk as at end-2014, the ringgit remained the currency of choice (39%) for sukuk issuance, followed by the US dollar (32%) and the Indonesian rupiah (9%).
On the domestic front, the value of outstanding sukuk had increased month on month to RM608.5 billion as at end-2015 (end-November 2015: RM595.3 billion), accounting for 54% of the market’s outstanding debt securities. RAM Ratings’ latest edition of the Sukuk Snapshot also shows that sukuk constituted 45% of the RM254.2 billion of domestically issued debt securities in 2015.
The Sukuk Snapshot is designed as a quick reference point for sukuk data and trends. This monthly publication aims to serve the needs of market practitioners, enabling them to monitor global and Malaysian sukuk market developments.
On the domestic front, the value of outstanding sukuk had increased month on month to RM608.5 billion as at end-2015 (end-November 2015: RM595.3 billion), accounting for 54% of the market’s outstanding debt securities. RAM Ratings’ latest edition of the Sukuk Snapshot also shows that sukuk constituted 45% of the RM254.2 billion of domestically issued debt securities in 2015.
The Sukuk Snapshot is designed as a quick reference point for sukuk data and trends. This monthly publication aims to serve the needs of market practitioners, enabling them to monitor global and Malaysian sukuk market developments.
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