MARC affirms ratings on Tradewinds Plantation Capital debt notes

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KUALA LUMPUR: Malaysian Rating Corporation Bhd (MARC) has affirmed its AAAIS and AA+IS ratings on Tradewinds Plantation Capital Sdn Bhd’s (TPC) asset-backed RM180.0 million Class A and   RM30.0  million  Class  B   Sukuk  Ijarah,   respectively with a stable outlook. The rating agencys said on April 10 the affirmed ratings of the Class A and Class B Sukuk Ijarah reflected the satisfactory performance of the securitised plantation assets. "The stable outlook on the ratings reflect expectations that the estates performance will remain within MARC’s assessed sustainable net operating income (NOI) of RM42.0 million and long term CPO price assumption of RM1,500 tonnes amidst the continuing volatility of the crude palm oil (CPO) prices. "Nevertheless, continued deterioration of CPO prices below our long term price assumption resulting in the actual NOI of the estates falling below MARC’s assessed sustainable NOI may lead to downward pressure on the outlook of the ratings," it said.MARC had also affirmed its MARC-1ID and MARC-1ID(bg)/AA+ID(bg) ratings on TPC’s  RM90.0  million  Murabahah Commercial Papers (CPs) and RM100.0 million Bank Guaranteed Murabahah CPs/Medium Term Notes (BG CP/MTN), respectively with a stable outlook. The rating of the CPs reflects the short-term corporate credit rating of Tradewinds while the ratings of the BG CP/MTN reflect the financial institution rating of the bank guarantor, OCBC Bank (Malaysia) Berhad. TPC, wholly-owned by Tradewinds, was incorporated for the sole purpose of issuing RM210.0 million Sukuk Ijarah and RM190.0 million Murabahah CP/MTN, the proceeds of which were used to purchase a pool of plantation assets - 12 estates and three palm oil mills - from Tradewinds’ nine subsidiaries (sellers/lessees).  The assets were then leased back to the sellers under separate Ijarah agreements with the lease payments forming the source of repayment for the issued securities.  The lease payments match the Sukuk (i.e. principal) and return (i.e. profit) payment obligations under the Sukuk Ijarah while the CPs - the credit-linked class - are serviced by Tradewinds directly.