RAM Rating said its rated portfolio profile remains robust with about 80 per cent carrying AA3 or higher ratings which indicate a strong capacity to meet debt obligations on a timely basis.
In a statement, the rating agency said at a broader level, the recent performance of Bursa Malaysia-listed companies indicates corporate balance sheets remained healthy in the first quarter of 2022, with 60 per cent registering year-on-year profit growth while maintaining conservative leverage (median: 0.21 times).
It said Malaysia’s gross domestic product grew 6.9 per cent in the first half of 2022 (H1 2022) exceeding expectations (H1 2021: seven per cent) on the back of strong domestic recovery and sustained exports.
“The job market remains sanguine with spare capacity. Meanwhile, domestic inflation, though rising, remains manageable due in part to price controls. These should propel the economic growth this year.
“On the other hand, external headwinds continue to loom,” Bernama reported the rating agency saying in a statement on the side-lines of the release of its latest Corporate Default and Rating Transition Study.
The study provides an update on the credit performance of RAM’s rated corporate portfolio in H1 2022.
RAM Rating said the risk of a global slowdown, spiralling inflation and continued supply chain disruptions caused by lockdowns in China and the Russia-Ukraine war could weigh on the domestic growth outlook in H2 2022.
It added that RAM’s rating actions, including outlook revisions, were still negative for H1 2022, with three negative actions (one downgrade and two outlook revisions) against only one upgrade.
“Looking ahead, net rating action could still linger in the negative as issuers with negative outlooks continue to outnumber those with positive outlooks 3:1 as at end-June 2022.
“Only a limited number (less than two per cent) are deemed at higher risk of default although these issues are mostly guaranteed, cushioning investors’ losses in the event of default.
