MARC has affirmed the rating of Aman Sukuk Berhad's (Aman) Islamic Medium Term Notes (IMTN) programme of up to RM10.0 billion at AAAIS with a stable outlook

MARC has affirmed the rating of Aman Sukuk Berhad's (Aman) Islamic Medium Term Notes (IMTN) programme of up to RM10.0 billion at AAAIS with a stable outlook. Aman is a special purpose vehicle established to facilitate the issuance of IMTNs on behalf of its parent Pembinaan BLT Sdn Bhd (PBLT), which is wholly-owned by the Malaysian government. PBLT has been tasked to construct facilities and housing quarters for the Royal Malaysian Police (Police DiRaja Malaysia, or PDRM) under a build, lease and transfer model (BLT). The rating affirmation is premised on the credit strength of the Government of Malaysia (GoM) as the single obligor and sublessee of the PDRM projects for which it will enter into irrevocable sublease agreements with PBLT, which will in turn assign all sublease rental collections to Aman under the transaction structure of the programme. 

MARC draws comfort from the sublease rental payments from the government that will match the repayment profile of each series of IMTN issued such that it is adequate to cover both principal and profit payments when due during the tenures of the issues. Noteholders are also insulated from construction risks as the IMTNs can only be drawn down for projects or sections of projects that have been issued with certificates of completion and compliance. The transaction structure further eliminates commingling risk by ensuring that the government makes sublease payments directly into a collection account that is jointly maintained by the security agent and the issuer without passing through PBLT's bank accounts.

MARC notes that as at September 30, 2012, Aman had issued IMTNs totalling RM4.415 billion, with the first redemption of RM170 million due in February 28, 2014. PBLT has completed 68% of its total project value as of end-September 2012. Construction is progressing according to schedule with project completion expected by end-2015. 

The stable outlook reflects MARC's expectations that the sublease rentals backing the transaction will continue to be supported by the GoM with timely funding allocations.

Contacts: Ngiam Tee Wei +603-2082 2268/ teewei@marc.com.my; Taufiq Kamal +603-2082 2251/ taufiq@marc.com.my.