RAM Ratings has assigned a preliminary rating of AA2/Stable to the RM218.0 mil First Tranche Senior Class A Medium-Term Notes (Senior MTN) to be issued by Poseidon ABS Berhad (Poseidon or Issuer) under a RM3.5 bil asset-backed MTN programme. The Issuer is a trust-owned special purpose vehicle incorporated to facilitate the securitisation of receivables originated by SeaMoney Capital Malaysia Sdn Bhd (SCM). 

SCM is ultimately owned by Sea Limited (Group), a NYSE-listed technology conglomerate. The Group operates three core businesses across digital entertainment, e-commerce, as well as digital payments and financial services, known as Garena, Shopee and SeaMoney, respectively. SCM offers Buy Now Pay Later (BNPL) financing under SPayLater on the Shopee platform.

The initial issuance is expected to comprise up to RM218.0 mil of Senior MTN and RM100.9 mil of Junior MTN (collectively, the First Tranche MTN), proceeds of which will be used to purchase RM300.0 mil of eligible BNPL receivables from SCM, defray upfront programme expenses and prefund liquidity reserves. The Junior MTN will be fully subscribed by an entity within the Group and are subordinated to the Senior MTN in terms of payment priority and claims at all times.

The preliminary rating for the Senior MTN is supported by the initial overcollateralisation (OC) rate of 37.61%, which provides adequate credit support that commensurate with a AA2 rating. RAM's assessment modelled transaction cashflow performance under various stress scenarios where rapid amortisation is triggered by a breach of the thresholds for minimum collection rates, maximum cumulative default rates and/or minimum OC rate requirements.

The transaction structure includes a revolving period of up to 24-months which allows the Issuer to purchase further receivables, using proceeds from collections and/or additional issuances of Junior MTN or redeemable preference shares, subject to meeting the minimum required OC rate and other portfo