Published on 21 May 2015
RAM Ratings has reaffirmed the respective
A2/Stable/-, A3/Stable/- and BBB2/Stable/- ratings of Domayne Asset 2
Corporation Berhad’s (DACB 2) Class A, Class B and Class C Notes
(collectively known as “the Senior Notes”). DACB 2 is a special-purpose
vehicle that had been incorporated to undertake the issuance of the
Senior Notes, to partially fund the purchase of Eligible Receivables
from Diners Club (Malaysia) Sdn Bhd (DCM or the Originator).
Based on monthly transaction reports from the
administrator as of the calculation date of 23 April 2015, the
outstanding RM33.5 million of Class A Senior Notes were supported by
sufficient credit enhancement in the form of an available
overcollateralisation (OC) of 63.18%, backed by RM42.07 million of
Financed Receivables and RM7,720,820 (as at 29 April 2015) in the SPV
Principal Account. Based on the portfolio composition as at 23 April
2015, the available OC sufficiently meets the required OC of 37.4% to
fund charge- and credit-card receivables as well as 690.4% for D-cash
receivables. The reaffirmation of the ratings is premised on this and
the fact that the respective charge-card, credit-card and D-Cash
receivables’ key performance parameters – such as payment rate,
portfolio yields and charge-off rate – remained within our base-case
assumptions. As at 23 April 2015, the reserve account contained
RM335,000 – in line with the required threshold.
On a portfolio basis, the 2-month rolling-average
collection rates and 3-month rolling-average excess spread averaged
25.4% and 1.3%, respectively, in 2014. We note that the 3-month
rolling-average excess spread had inched close to the 1.0%
rapid-amortisation trigger threshold during the reviewed period.
Nonetheless, the available OC provides sufficient support for the
repayment of the Senior Notes within the 15-month rapid-amortisation
period in the event of a breach in the rapid-amortisation triggers.
Having said that, as D-Cash receivables continue winding down,
we have observed improvements in the 2-month rolling-average collection
rates and corresponding enhancements in the 3-month rolling-average
excess spreads since January 2015.
In the meantime, DCM is looking at revising the subordination percentage of D-Cash receivables to reflect the Originator’s revised business strategy, of offering D-Cash
with a shorter maximum tenure of 24 months compared to the previous 60
months. At this point, DCM is still reviewing the details of the
proposal; no revision has been effected. Any revision will be subject to
confirmation of the relevant ratings by RAM.
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