MARC downgrades Alam Maritim sukuk

PETALING JAYA: Malaysian Rating Corp (MARC) has downgraded its rating on marine services provider Alam Maritim Resources Bhd by one notch and it is retaining its negative outlook.

It said the affected debt notes were the RM500mil sukuk ijarah medium-term notes which were lowered to BB+IS from BBB+IS.

MARC had earlier placed the sukuk rating on MARCWatch negative on May 30, 2017 to highlight the sukuk’s increased vulnerability to missed payments or a distressed exchange following the company’s announcement that it had sought the Corporate Debt Restructuring Committee’s (CDRC) assistance to mediate negotiations with its creditors.

“The downgrade to BB+IS reflects heightened default risk with respect to a scheduled RM30mil principal sukuk payment due on July 6, 2017.

“Alam Maritim continues to remain under an informal standstill arrangement with its financiers, the continuation of which is conditional upon the company submitting a proposed debt restructuring scheme that is in compliance with the CDRC’s restructuring principles by end-July 2017.

“The balance of the sinking fund account for the sukuk, last given as RM25.3mil as at end-April 2017, is insufficient for the purpose of meeting Alam Maritim’s upcoming sukuk principal payment,” it said in a statement.

MARC pointed out Alam Maritim has not shared any plan on how it intends to address the upcoming payment issue.