RAM Ratings suspends rating of Al Bayan's RM1b Sukuk

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KUALA LUMPUR: RAM Rating Services has suspended the rating of the RM1bil Sukuk Wakalah (2013/2023) issued by Al Bayan Holding Company following the group’s failure to meet certain obligations under RAM’s rating mandate

The Sukuk was issued through a special-purpose vehicle, ABHC Sukuk Bhd,. 

“We were unable to contact Al Bayan and seek a satisfactory resolution of outstanding matters. 

“The suspension of an issue rating signifies that it has been 'put on hold'.” RAM said.

It said the rating of the Sukuk Wakalah was downgraded from C1(s) to D after Al Bayan failed to redeem RM100mil of outstanding sukuk on the maturity date of Dec 16, 2016. 

Subsequently, the maturity date of the outstanding sukuk was extended to  June 16, 2017. 

Recall that RAM Ratings had stated on Dec 16, 2016 that Al Bayan’s failure to redeem RM100mil of outstanding sukuk on the maturity date of Dec 16 was confirmed by the facility agent, HSBC Bank (Malaysia) Bhd’s announcement through the Fully Automated System for Issuing/Tendering (or FAST). 

Under RAM’s rating definitions, a sukuk rated D is either currently in default or faces imminent default on its financial obligations, whether or not formally declared. 

The D rating may also reflect a distressed exchange, the filing of bankruptcy and/or other actions pertaining to the issuer that could jeopardise the payment of a particular sukuk. 

Al Bayan is a family-owned, Saudi-based conglomerate, mainly involved in specialised construction of public infrastructure and the supply of a wide range of equipment and IT products and services, primarily servicing the government. 

ABHC is a special-purpose vehicle incorporated in Malaysia as a conduit to facilitate the froup’s sukuk transaction. 

Under a Kafalah agreement in favour of ABHC, the Group provides an irrevocable and unconditional guarantee to the sukuk holders. As such, the enhanced rating of the sukuk is based on Al Bayan’s credit profile.