KUALA LUMPUR: RAM Ratings has lifted the negative rating watch on the long-term rating of MAA Holdings Bhd's RM200mil commercial papers/medium-term notes (CP/MTN) programme (2007/2014).
At the same time, the rating has been downgraded from BB3 to B1, with a negative outlook. Concurrently, the short-term rating has been reaffirmed at NP.
Meanwhile, the AAA(bg) rating of the first RM200mil MTN issue (2007/2012) under MAA Holdings's CP/MTN programme, which is guaranteed by AAA-rated DBS Bank Ltd, has been reaffirmed with a stable outlook.
The enhanced rating of the first issue reflects the unconditional and irrevocable guarantee extended by DBS Bank; this enhances the credit profile of the debt issue beyond MAA Holdings' inherent or stand-alone credit position.
The rating watch had been placed on Dec 6, 2010, triggered by MAA Holdings' failure to deposit the RM30mil principal payment for the first issue into the debt service reserve account (DSRA) on that day.
The company had subsequently obtained approval from the bondholders to extend the time to deposit the principal payment before Jan 6, 2011. At the same time, MAA Holdings managed to secure a bridging loan of RM36.3mil, which was drawn down immediately and deposited into the DSRA on Dec 30, 2010.
The rating downgrade and the negative outlook are premised on MAA Holdings' still-tight liquidity position and the even shorter timeframe for the company to meet its final principal payment.
Given that the company has insufficient internal funds, the final payment of RM140mil due on Jan 6, 2012 will hinge on the proceeds from the sale of Malaysian Assurance Alliance Bhd's life and/or general-insurance businesses. - Reuters
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