Published on 27 February 2013
RAM Ratings has reaffirmed the
respective long- and short-term ratings of A1 and P1 for Blondal Resources Sdn
Bhd’s (“BRSB”) RM70 million Commercial Papers and Medium-Term Notes Programme
(“CP/MTN”); the long-term rating has a stable outlook. BRSB had been
specifically incorporated to undertake the securitisation of the hire-purchase
receivables of Blondal Sdn Bhd’s (“Blondal”) subsidiary – Primuda Sdn Bhd – via
the issuance of the CP/MTN. Blondal is involved in direct sales of household
and industrial appliances, primarily under the Lux, Städa and HydroGuard
brands.
The reaffirmation of the ratings
is premised on the available collateralisation cover supporting the CP/MTN. As
at end-August 2012, BRSB had RM11.00 million of outstanding CP, supported by
RM20.55 million of HP receivables (“the Portfolio”); this resulted in a
collateralisation level of 208% against the covenanted 180% that must be
maintained at all times. The greater-than-required asset coverage – a result of
Blondal’s replacement of defaulted and repossessed accounts as per the
transaction requirements – provides additional cushion against any further
increases in the net default levels of the Portfolio.
As at end-August 2012, the
cumulative peak net default rate of the securitised pool since issuance stood
at 7.22%, i.e. higher than our base-case assumption of 6.50%. We note, however,
that newer receivables are no longer representative of the Portfolio’s
historical performance. Notably, newer receivables derived from the purchase of
point-of-entry products (which now form more than 90% of the securitised pool,
consistent with the shift in Blondal’s product range) show lower cumulative net
default rates of 6.00% to 6.50%. As such, we have maintained our base-case
assumption. Meanwhile, the repossession and prepayment rates of the Portfolio
have remained within our expectations, standing at a respective 17.83% and
0.32% as at end-August 2012.
We highlight that the
transaction’s performance relies on Blondal’s ability to sustain its business
volume, to replenish the portfolio following losses and also to refinance the
outstanding CP falling due as the transaction approaches its legal maturity. On
this note, Blondal’s average originated monthly receivables of RM3.7 million
are deemed more than adequate to cope with the average required replacement of
RM0.6 million. Failure to replace these receivables will lead to an early
amortisation event. As of end-August 2012, Blondal had replaced RM26.88 million
of “losses arising from defaults and repossession” with RM35.89 million of new
receivables. Based on its latest available financials, Blondal returned to
profitability in FY Dec 2011 and is on track to achieve another year of
operating profit for FY Dec 2012. Its balance sheet, however, is moderately geared
with debt/equity ratio of 0.9 times. Overall, its credit profile is viewed to
have moderate cashflow-coverage metrics.
Media contact
Lim Chern Yit
(603) 7628 1035
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.