KUALA LUMPUR, April 10 (Bernama) -- Malaysian Rating Corporation Bhd (MARC) has lowered its rating on Ingress Sukuk Bhd's (ISB) RM160 million Sukuk Al Ijarah to BB-IS from BBB-IS.

The lowered rating remained on MARCWatch Negative, the rating agency said in a statement today.

ISB is a wholly-owned funding vehicle of auto parts manufacturer Ingress Corporation Bhd.

MARC said since its downgrade of the sukuk rating on March 31, 2009, ISB has failed to make a RM25 million payment into the Ijarah Service Rental Account (ISRA) within the required deadline of April 9, 2009.

"Its sukukholders have not approved the waiver of the sinking fund build-up requirement and although the Ijarah agreement provides a remedy period of 30 days to meet the shortfall in the ISRA, it is unlikely that Ingress will be able to comply with the requirement given its strained liquidity position as well as the lack of meaningful progress in its asset disposal initiatives," it said.

Accordingly, the rating downgrade reflected increased likelihood of payment default with respect to the upcoming Sukuk redemption on July 9, 2009, it added.

The MARCWatch Negative, therefore, incorporates the possibility of the rating being further lowered if ISB fails to meet its sinking fund build-up requirement within the 30-day remedy period.

MARC said it would continue to monitor the progress of Ingress' debt restructuring exercise which was recently announced.