Posted Date: July 30, 2021

MARC has affirmed its insurer financial strength (IFS) rating of AAA and counterparty credit ratings of AAA/MARC-1 on Danajamin Nasional Berhad (Danajamin). Concurrently, the rating agency has affirmed its ratings of AAAIS and AA+IS on the Senior and Subordinated Sukuk Murabahah of up to RM2.0 billion under Danajamin's Sukuk Murabahah programme. The outlook on all ratings is stable.

The affirmed IFS rating is driven by Danajamin's status as a government-owned financial guarantee insurer and perceived strong support from the government. The rating also factors in the company's strong capitalisation and healthy liquidity position.

The growth of Danajamin's guaranteed portfolio has been weighed down largely by economic conditions as businesses deferred expansion plans. As at end-2020, Danajamin's insured portfolio stood at 18 issuers with gross outstanding issuance of RM3.4 billion (2019: 23 issuers, RM4.1 billion); it concluded one new deal in the property development sector with an approved limit of RM35 million during the year (2019: five deals; RM565 million). Given the prevailing weak economic outlook, the guaranteed portfolio growth will remain muted in the near to medium term.

In 2020, the company recorded net profit of RM76.3 million, up from RM3.2 million in 2019 which was affected by claim liabilities worth RM80.4 million related to an oil and gas issuer. Additionally, cuts in the overnight policy rate (OPR) had affected its investment yield.

In terms of capitalisation, its capital adequacy ratio of over 500% as at end-2020, significantly higher than the minimum regulatory requirement of 130%, remains healthy and provides a strong buffer to absorb any sudden losses. Its net leverage ratio improved to 1.73x, well below the maximum leverage of 7.5x while liquidity has remained strong. Its investment portfolio mainly comprises investments in short-term money market deposits and low-risk assets. These investments stood at 80.8% of total investments as at end-2020.

Farhan Darham, +603-2717 2945/ farhan@marc.com.my;
Haziq Najmuddin, +603-2717 2965/ haziq@marc.com.my;
Mohd Izazee Ismail, +603-2717 2947/ izazee@marc.com.my.

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