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Posted Date: October 06, 2021

MARC views the acquisition of Danajamin Nasional Berhad (Danajamin) by Bank Pembangunan Malaysia Berhad (Bank Pembangunan) does not have immediate rating implications on both entities. The rating agency currently rates both entities at AAA with a stable outlook.

Bank Pembangunan will acquire 50% of Danajamin's shares from Credit Guarantee Corporation Malaysia Berhad (CGC) and the remaining 50% from Minister of Finance (Incorporated) (MoF Inc). The acquisition will be funded by cash to CGC and new issuance of shares in Bank Pembangunan to MoF. As a result of the acquisition exercise that is expected to be completed by end-November 2021, Danajamin will become a wholly-owned subsidiary of Bank Pembangunan.

The acquisition is the first phase under the government's plan to consolidate development financial institutions (DFI) in the country. MARC regards the consolidation of DFIs will align mandates, create synergies and improve efficiencies in the DFI space. The current rating on Bank Pembangunan reflects its status as an MoF Inc-owned entity mandated to provide financing to key sectors in line with the government's development goals. The bank is also strengthening its position in the sustainability financing space in sync with the government's agenda.

Danajamin's status as the sole government-owned financial guarantee insurer to facilitate businesses in accessing the capital market remains a key rating consideration. Post-acquisition, MARC does not envisage any immediate dilution in their mandated roles and government support.

MARC's full ratings on Bank Pembangunan and Danajamin are as follows:
Entity Type of rating Rating Outlook
Bank Pembangunan

Financial Institution AAA Stable
RM5.0 billion Islamic Medium-Term Notes AAAIS Stable
Danajamin

Insurer Financial Strength AAA Stable
Counterparty Credit AAA/MARC-1 Stable
RM2.0 billion Senior and
Subordinated Sukuk Murabahah
AAAIS/AA+IS Stable


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