RAM Ratings has reaffirmed the AAA/Stable rating of the RM339.38 million MTN (First Notes Series) issued by AmMortgage One Berhad (AmMortgage or the Issuer), involving the securitisation of staff housing loans originated by Telekom Malaysia Berhad (TM or the Originator).

Published on 28 July 2016

RAM Ratings has reaffirmed the AAA/Stable rating of the RM339.38 million MTN (First Notes Series) issued by AmMortgage One Berhad (AmMortgage or the Issuer), involving the securitisation of staff housing loans originated by Telekom Malaysia Berhad (TM or the Originator).

The reaffirmation is premised on the available credit enhancement provided by the 50.12% overcollateralisation (OC) level, supported by RM99.42 million of outstanding principal receivables and RM3.97 million of cash (including permitted investments) as at end-March 2016 (end-May 2015: 36.30%). The significant improvement in OC was mainly a result of the faster-than-expected deleveraging of the First Notes Series, following favourable default and prepayment performances. As at the same date, the cumulative net default rate stood at 0.36% vis-à-vis our base-case rate of 4.13% while the cumulative prepayment rate came up to 25.57%.  

Although the transaction is burdened by negative yield spreads given the preferential rate of 4% on the loans vis-à-vis the 5.10% interest payable on the First Notes Series, the transaction benefits from other credit enhancements that moderate this effect, such as monthly subsidies from TM. To date, RM33.87 million has been received by the Issuer. As TM is also the ultimate paymaster of all the borrowers, the First Notes Series is exposed to the Originator’s credit profile (TM’s Islamic securities are rated AAA/Stable/P1 by RAM). Having said that, we derive comfort from TM’s superior credit profile, underpinned by its exceptional financial position and strategic importance as Malaysia’s national telecommunications company.

Meanwhile, we have also taken into account the servicing ability of the Portfolio Servicer – AmBank (M) Berhad – including its administration of the entire TM Employee Mortgage Scheme for and on behalf of TM. We expect AmBank to be able to adequately perform its responsibilities as the servicer under the transaction documents.

Media contact
Lim Chern Yit
(603) 7628 1035
chernyit@ram.com.my