MARC Ratings has maintained its ratings on Alpha Circle Sdn Bhd’s outstanding RM80 million Senior Sukuk Musharakah and RM55 million Junior Sukuk Musharakah at BIS and CIS. The senior sukuk’s rating outlook has been maintained at negative.
The rating actions reflect Alpha Circle’s weak financial position to be able to fully meet its remaining sukuk repayments and instead has relied on the indulgence granted by sukukholders to defer shortfalls on the sukuk payments. It had utilised RM15 million in the finance service account (FSA) to partly redeem a senior sukuk payment of RM35 million due on June 23, 2022. The upcoming senior sukuk payment of RM80 million (including the deferred balance payment from June 2022) is due on November 23, 2022.
Sukukholders have granted an indulgence to Alpha Circle to defer shortfalls until the final maturity in August 2023. For the junior sukuk of RM55 million, the final maturity will also be deferred from May 2023 to August 2023.
Alpha Circle’s cash flows have seen some recovery following the lifting of pandemic-induced closures; however, the issuance of foreign worker permits is still sharply lower than the pre-pandemic level. Total foreign worker permit volume issued of about 1.3 million, translating to an average monthly issuance of 139,000 between August 2021 and April 2022, was about 16.3% lower compared to the forecast of 166,000. Assuming a monthly permit issuance volume of 130,000, the FSA is projected to have RM40 million by November 2022, which is insufficient to redeem the outstanding sukuk under the programme by the original final maturity date.