Posted Date: August 27, 2021

MARC has extended its MARCWatch Negative placement on Serba Dinamik Holdings Berhad's (Serba Dinamik) RM1.5 billion Islamic Medium-Term Notes (IMTN) Programme and RM500.0 million multi-currency Islamic Commercial Papers (ICP) Programme with a combined limit of RM1.5 billion. The placement, since May 31, 2021, reflects our ongoing concerns on the issues raised on Serba Dinamik's audited accounts for fiscal 2020 by its then external auditor, KPMG PLT.

We note that Serba Dinamik had on July 2, 2021, appointed Ernst and Young Consulting Sdn Bhd to conduct an independent review on the issues raised. It also appointed Nexia SSY PLT on August 4, 2021, as external auditor for the period between January 1, 2020, to June 30, 2021. Pending the findings of the appointed external parties, we will resolve the MARCWatch through a definitive rating action. The ratings on the IMTN/ICP programmes could face downgrades from their A+IS/MARC-1IS ratings prior to the MARCWatch placement in the event of a negative outcome from the independent review and/or audited accounts submission.

Among the factors we will consider in our assessment once the findings are available is the group's liquidity position, particularly its ability to address the refinancing risk of its US$222 million sukuk obligations in May 2022. As at to-date, there is no outstanding apart from RM100.0 million in ICPs under the rated programmes.

Neo Xue Wei, +603-2717 2937/ xuewei@marc.com.my;
Lee Chi Han, +603-2717 2939/ chihan@marc.com.my;