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-RAM Ratings places Idaman Capital's AAA debt rating on "negative" watch.

BANKING AND CREDIT NEWS-September 13, 2010--RAM Ratings places Idaman Capital's AAA debt rating on "negative" watch(C)2010 M2 COMMUNICATIONS http://www.m2.com

13 September 2010 - RAM Rating placed on Monday on "negative" watch the AAA ratings on the MYR50m (USD16.1m/EUR12.6m) class A and MYR430m class B super senior fixed-rate bonds of Malaysian special purpose vehicle (SPV) Idaman Capital Berhad.

The "negative" watch has been prompted by RAM Ratings' concerns over the vulnerability of the super senior bonds given the recent default by one of Idaman's obligors, the agency explained.

RAM Ratings is anxious about the liquidity positions of a number of the credit-impaired obligors given the impending interest and principal payments falling due on 11 October 2010.

Idaman is a trust-owned, bankruptcy-remote SPV, incorporated specifically to undertake this primary collateralised-loan-obligation transaction.

Idaman had utilised the bonds' proceeds to purchase an MYR800m loan portfolio from Alliance Investment Bank Berhad.

Meanwhile, the bonds are secured against the loan portfolio that had originally consisted of 25 obligors.

Idaman utilises the interest and principal receipts from the Portfolio to meet its operating expenses as well as coupon and principal payment obligations on the bonds.

Since RAM Ratings' last quarterly update in July 2010, the credit estimates of one of the four credit-impaired obligors has been downgraded to D, following its failure to service the interest on its other loans.

The agency understands that this obligor has since embarked on a financial-restructuring scheme to resolve its debt woes.

While the super senior bonds are still able to withstand the loss of cash flow from the defaulted obligor under a AAA rating stress scenario, the "negative" watch reflects the potential downward rating migration of the super senior bonds should more than one of the three remaining credit-impaired obligors fail to honour their debt commitments, the agency said.

RAM Ratings notes that the remaining credit-impaired obligors are still paying their monthly amortisation charges, as per their agreements with the portfolio manager.

RAM Ratings is currently conducting the annual review of Idaman's debt ratings, which is expected to be completed by November 2010.

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Publication:M2 Banking & Credit News (BCN)
Date:Sep 13, 2010
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