Posted Date : 30 Apr 2014

At Malaysian Rating Corporation Berhad’s (MARC) 18th Annual General Meeting (AGM) held at Sime Darby Convention Centre on 30 April 2014, the company announced its results for the financial year ended 31 December 2013. Datuk Azizan Haji Abd Rahman, who assumed the chairmanship of MARC since the last AGM a year ago, informed shareholders of MARC, which comprise insurance companies, stockbrokers and investment banks, that the company posted a consolidated pre-tax profit of RM5.6 million in 2013 on the back of total revenue of RM15.7 million. At the AGM, the shareholders also approved a final dividend payment of 10 sen per share, bringing the total dividend for the year to 17.5 sen per share (2012: 10.5 sen).

“This set of results is encouraging, considering the rather pronounced fall in total gross corporate debt issuance of 30.8% in 2013 to RM86.2 billion as compared to RM124.6 billion in 2012,” said Datuk Azizan. He added that the volume of rated bond issuance has also declined with the market becoming more receptive to non-rated debt during the year under review. “Despite this backdrop, MARC managed to achieve a moderate increase in market share of new domestic rated issuances in 2013. MARC will continue to deliver its strategy and long-term vision of becoming a provider of trusted insights on risk,” said Datuk Azizan.

On the subject of expanding MARC’s geographical footprint, Datuk Azizan informed the meeting that MARC’s technical collaboration with Bahrain-based Islamic International Rating Agency (IIRA) had been renewed in 2013 for another two years. He said that MARC viewed IIRA as possessing long-term potential as a springboard into the credit rating market of the Gulf Cooperation Council countries. Additionally, on 16 January 2014, ARC Ratings SA (ARC), a European-based international credit rating agency, was established with MARC as one of the five founding shareholders. “ARC is the result of five domestic credit rating organisations in the continents of Asia, Africa, Europe and Latin America banding together to form a new international credit rating agency, each taking an equal stake in the venture. Through ARC, MARC and its alliance members will bring their analytical expertise and local perspectives to the global capital markets,” he explained.

MARC’s Chief Executive Officer, Mohd Razlan Mohamed, said in his review of business and operations that the prospects for the domestic rated debt market will remain challenging in the year ahead. MARC expects the domestic total issuance of private debt securities for 2014 to reach around RM65-75 billion.

“MARC completed and assigned 18 new issue ratings with a total rated programme size of RM36.66 billion in 2013, of which 14 were sukuk instruments, with a combined facility size of RM25.96 billion. Project finance and infrastructure ratings took centre stage in MARC’s 2013 new issue rating universe. A total of 10 new issue ratings with a total rated programme size of RM22.20 billion from the infrastructure sector, predominantly the power sector, were rated by MARC,” said Mohd Razlan.

On the subject of rating transition, Mohd Razlan said, “There were fewer issuers affected by negative rating activity in 2013 compared with 2012. The corporate rating downgrade-to-upgrade ratio was 5:1 compared to 10:1 in the previous year. The majority of MARC’s rating universe, 58 out of 64 issuers or 90.6%, remained stable in 2013.” 

At the conclusion of the meeting, Datuk Azizan highlighted that MARC is continuously on the lookout for new business opportunities in emerging markets where the rating business is fairly nascent but has strong potential to grow. The rating agency also acknowledges the need for a strong commitment to continuous improvement in all aspects of its activities, given the increasingly complex economic and business environment in which it operates. To remain relevant, MARC will accordingly raise the bar higher in its credit rating and governance practices to meet the demand for reliable, insightful and independent credit opinions from its stakeholders.

James Foo, +603-2082 2212/ james@marc.com.my.