MOODY'S ASSIGNS PROSPECTIVE RATINGS TO CRL REALTY SECURITIZATION
Approximately S$198.0 Million of Asset-Backed Securities Rated.
Hong Kong, December 11, 2002 -- Moody's Investors Service has assigned prospective ratings of (P)Aaa to
the Class A1 and Class A2 notes, (P)Aa2 to the Class B notes and
(P)A2 to the Class C notes to be issued by Aragorn Investment Corporation
The transaction is a cross-border securitization using both deferred
payment and progressive payment receivables generated by Singapore-based
CRL Realty Pte. Ltd (CRL Realty). The transaction will be
brought to the market by Bayerische Hypo- und Vereinsbank AG,
Singapore branch (HVB Singapore).
The complete rating actions are as follows:
Issuer: Aragorn Investment Corporation Limited
US$ million Class A1 Notes due 2008, rated (P)Aaa;
US$ million Class A2 Notes due 2008, rated (P)Aaa;
S$ million Class B Notes due 2008, rated (P)Aa2;
S$ million Class C Notes due 2008, rated (P)A2
The prospective ratings address the timely payments of interest on,
and the ultimate repayment of principal of, the notes at par by
the legal final maturity date in [March 2008].
In assigning the prospective ratings, Moody's considered the following:
1) the subordination provided to the Class A1 and Class A2 notes by the
Class B and Class C notes; the subordination provided to the Class
B notes by the Class C notes
2) the over-collateralization provided by the underlying receivables
3) for the Class A1 and Class A2 notes, the cross-currency
swap provided by HVB Singapore as the currency swap provider and Coöperatieve
Centrale Raiffeisen-Boerenleenbank B.A, Singapore
branch (Rabobank Singapore) as the stand-by swap provider
4) the underwriting commitment and the marketable security collateralized
for the Class A1 notes
5) the regulatory protection offered by the Housing Developers (Control
and Licensing) Act (the "Act") and subsidiary legislations - namely,
the Housing Developers Rules and Housing Developers (Project Account)
Rules (the "Rules") - which regulate the flow of funds into and
from the developers' project accounts
6) the S$[17.8] million balance in the project account,
the S$[5.9] million pre-funded construction
escrow account with an additional S$ million to be deposited
in [September 2003] when the Class A1 notes are funded, to
cover the remaining budgeted development costs payable in the future
7) the S$ million and S$ million credit
facilities provided by HVB Singapore to respectively cover cost overruns
and payment shortfalls due to construction delays
8) the S$ million pre-funded expense reserve account
to cover interest payments on the notes, plus certain fees and expenses
from the closing date to the expected maturity date
9) the current condition of Singapore's residential market and the historical
payment performances of buyers of residential units in Singapore
10) the experience of CRL Realty in budgeting and controlling the development
costs and managing the development of residential property projects
11) the legal and structural protections of the transaction, including
the payment distribution mechanism and the 3-year tail period
Aragorn Investment Corporation Limited, the issuer, will issue
4 classes of notes. It will use the issuance proceeds from the
Class A2 notes, Class B notes and Class C notes to purchase the
underlying receivables from CRL Realty and to fund various transaction
accounts. HVB Singapore will subscribe for the Class A1 notes on
the closing date, and fund them in [September 2003].
CRL Realty is currently developing a 398-unit residential project
(Waterina) in Singapore. As of November 30, 2002, 338
units had been sold under the deferred payment scheme and another 15 units
under the progressive payment scheme. The unpaid portion of the
purchase prices of these units, together with the purchase prices
of the 45 unsold units, will form the receivables in this transaction
for a total receivables amount of about S$ million.
Under the two payment schemes, as of November 30, 2002,
buyers had made total deposits of S$[27.4] million,
of which S$[9.6] million had been used to pay for the
development costs, and the remaining deposits will be used to cover
the development costs of the yet-to-be completed project.
In addition, S$[5.9] million from the note issuance
proceeds will deposit into the construction escrow account. When
HVB Singapore pays for the Class A1 notes in [September 2003],
all the proceeds will also be deposited into this account to cover budgeted
but unpaid costs in the future.
To cover the risk of cost overruns, CapitaLand Residential,
Ltd., the parent of CRL Realty, will provide a cost-overruns
undertaking of up to % of the budgeted development costs.
If this cost-overruns undertaking is fully utilized or unavailable
for any reason, HVB Singapore will cover any additional cost overrun
of up to S$ million under a revolving credit facility.
Quarterly interest payments on the notes from the closing date to the
expected maturity date in [March 2005] will come from a pre-funded
S$ million expense reserve account, which will be
funded from the notes proceeds. The principal repayments to the
investors will depend primarily on  collection of the remaining
portions of the purchase prices from the buyers,  the sales
proceeds from the 45 unsold units, and  any proceeds from
foreclosed units due to defaults among existing buyers, if any.
If the notes cannot be repaid in full by the expected maturity date,
there is a 3-year tail period to pay down the notes. Step-up
interest will be paid on the then outstanding balance of the notes during
this period. HVB Singapore will provide another credit facility
of up to S$ million to cover any shortfalls in payment
obligations, such as senior fees and expenses, and interest
and principal payments on the notes.
To mitigate the risk of a currency mismatch between the S$-denominated
receivables and the US$-denominated Class A1 and Class A2
notes, the issuer and HVB Singapore will enter into a currency swap
agreement. The agreement will enjoy additional protection from
the stand-by swap provider, Rabobank Singapore.
A more detailed analysis of the transaction will soon be available at
Moody's website in the Pre-sale Reports section: http://
The issuer, Aragorn Investment Corporation Limited, is a newly
established special purpose bankruptcy remote company incorporated with
limited liability in Singapore. CRL Realty is a multi-project
developer specializing in project developments and is a wholly owned subsidiary
of CapitaLand Residential, Ltd. CapitaLand Residential,
Ltd. is, in turn, the residential property arm of CapitaLand
Ltd., one of Singapore's largest conglomerates and which
is involved in, among others, property and property-related
The prospective ratings are issued in advance of the final issue of the
notes and reflect Moody's preliminary credit opinions regarding the transaction
only. Moody's makes no representations that the prospective ratings
will be the same as the final ratings. The definitive ratings of
the transaction are subject to the satisfactory review of the final structure,
documents and legal opinions which have to be provided to Moody's within
Moody's Investors Service is a publisher of rating opinions and research.
It is not involved in the offering or sale of any securities, nor
is it acting on behalf of the offering party. This release is not
a solicitation or a recommendation to buy, hold or sell securities.
Michael M. Ye
Structured Finance Group
Moody's Asia Pacific Ltd.
Asst Vice President - Analyst
Structured Finance Group
Moody's Asia Pacific Ltd.