Posted Date: February 23, 2016
Malaysian Rating Corporation Berhad (MARC) was named Malaysia’s Project Finance Rating Agency of the Year by The Asset magazine at its Triple A Rating Agency of the Year Awards 2016 ceremony held in Hong Kong on February 22, 2016. The Triple A Rating Agency of the Year Awards honours rating agencies which have excelled in Asia.
Mohd Razlan Mohamed, MARC’s Chief Executive Officer, upon collecting the award said, “MARC is honoured to be awarded this prestigious accolade and proud to be recognised for our analytical excellence in rating project finance transactions. The timing of this award is especially meaningful as MARC is celebrating its twentieth corporate anniversary this year. Since publishing our first project rating in 1997, MARC has remained committed to maintaining its project finance ratings as an authoritative source of information on a project’s relative ability to honour its obligations to security holders.”
Project bonds and sukuk continue to be important sources of financing for Malaysian domestic private infrastructure investment, as seen in the steady expansion of MARC’s project finance rating coverage over the years to encompass a variety of infrastructure, including water treatment facilities, toll roads, petrochemical terminals, gas pipelines and power projects. MARC is proud of the fact that the two largest single project sukuk issues in the global market were rated by the agency: the RM10.00 billion sukuk issued by Jimah East Power Sdn Bhd in 2015 and the RM23.35 billion sukuk issued by Projek Lebuhraya Usahasama Berhad (PLUS) in 2011.
Razlan expressed confidence in the prospects for project finance ratings, citing Malaysia’s significant continuing infrastructure investment needs and the sustained demand for well-structured project financings supported by long-term contractual cash flows as the basis. “The domestic insurance, pension and funds management sectors play a major role in infrastructure finance as the country’s primary long-term investors in project bonds and sukuk issuances. The challenge has always been to bring viable project bonds and sukuk to the market with ratings and risk-reward profiles that are acceptable to this generally conservative segment of institutional investors. Achieving an acceptable rating tends to be quite challenging for greenfield or brownfield projects with exposure to higher market and/or regulatory risks,” said Razlan. He therefore sees a larger role for credit enhancement, hybrid securities and increased contingency project sponsor support in bringing such project bonds and sukuk to the market, going forward.
MARC's Head of Project and Structured Finance Ratings David Lee, who was also present at the awards ceremony, commented, “While project finance analysis has grown more complex over the years, MARC's capabilities have grown largely in lock-step with the demands of project financing innovation on our analytical resources. The agency continues to enhance its risk assessment approaches and credit surveillance processes to ensure that its project ratings remain accurate benchmarks of default risk.”
Razlan extended his appreciation to his team at MARC who have worked incredibly hard and diligently. He added, “This recognition will spur us to strive even harder to deliver on our corporate vision of becoming a provider of trusted insights on risk.”
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