Tuesday 20, December 2016 by William Mullally

RAM Ratings downgrades Al Bayan’s Sukuk rating to D after default

AM Ratings has downgraded from C1(s) to D the rating of the MYR 1.0 billion Sukuk Wakalah(2013/2023) issued by Al Bayan Holding Company (the Group) through special-purpose vehicle, ABHC Sukuk Berhad.

AM Ratings has downgraded from C1(s) to D the rating of the MYR 1.0 billion Sukuk Wakalah(2013/2023) issued by Al Bayan Holding Company (the Group) through special-purpose vehicle, ABHC Sukuk Berhad.

The D rating reflects Al Bayan’s failure to redeem MYR 100 million of outstanding sukuk on the maturity date of 16 December 2016, as confirmed by the Facility Agent, HSBC Bank (Malaysia) Berhad’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 Group’s sukuk transaction. Under aKafalah 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.

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