By Violet Ooi
Moody’s Investors Service has assigned a provisional A3 rating to Cagamas Global Sukuk Bhd’s proposed $2.5 billion (RM8.6 billion) multi-currency sukuk programme.
The sukuk certificates will be issued by Cagamas Global Sukuk Bhd, a wholly-owned subsidiary of Cagamas Bhd. RAM Ratings has assigned a A/stable global rating to the sukuk programme.
The proceeds will be used by Cagamas Global Sukuk Bhd, the issuer, to acquire a beneficial interest in a portfolio of assets. These sukuk assets will form part of the “Wakala” assets and “Murabaha Investment” portfolios. Cagamas Bhd, which acts as the agent, will manage these assets on behalf of Cagamas Global Sukuk which is the trustee for the certificate holders.
According to Moody’s, the (P)A3 rating assigned to the programme is in line with Cagamas Bhd’s A3 foreign currency long-term issuer rating. It also reflects Moody’s opinion that the sukuk certificate holders effectively have a claim against Cagamas Bhd, ranking pari passu with other senior unsecured obligations.
It stated that the rating of the sukuk programme reflects Moody’s view that the risk profile of the sukuk certificates is equivalent to Cagamas Bhd’s long-term foreign-currency issuer rating; the rating on the sukuk programme will change in line with Cagamas Bhd’s long-term foreign-currency issuer rating.
Moody’s said that, given the positive outlook on Cagamas Bhd’s issuer ratings, an upgrade of the A3 Malaysia sovereign rating would likely lead to an upgrade of the rating on the sukuk programme, assuming that Cagamas Bhd’s credit metrics remain robust.
“Conversely, the positive outlook on the issuer ratings could be revised to stable if the outlook of the sovereign bond rating is revised to stable,” said Moody’s in a note today.
On the other hand, RAM Ratings said that Cagamas’ A/stable P1 ratings are underpinned by its robust asset quality, solid capitalisation and systemic position within the Malaysian capital markets, in its role as a liquidity provider.
“Given Cagamas’ systemic importance, we believe that support will be readily extended in the event of any financial distress. As such, its ratings are correlated with Malaysia’s sovereign ratings to some extent. Any movement in Malaysia’s sovereign ratings could lead to a change in the company’s ratings and, consequently, that of the sukuk programme,” added RAM Ratings.
You must be logged in to post a comment.