Posted Date : 29 May 2008
Malaysian Rating Corporation Berhad (MARC), in conjunction with its 12th Annual General Meeting, announced an impressive 37% growth in pre-tax profit to RM11.76 million for the financial year ended 31 December 2007 from RM8.61 million in FY2006. The improved performance of MARC was fuelled by the brisk debt capital markets activity as reflected in the higher volume of bonds issuance as well as the increase number of issuers tapping the bond markets. The favourable bond market conditions were underpinned by the robust domestic economy, conducive interest rate environment as well as the sustained supply and demand for Islamic financing instruments.
MARC completed 72 issue ratings involving 32 issuers with a total rated value of RM84.93 billion in 2007. The breakdown by rating group classification is given as follows: RM77.66 billion in Corporate Debt; RM1.14 billion in Asset Backed Securities; RM5.89 billion in Structured Finance; and RM240 million in Project Finance. Of this, RM55.0 billion with 38 number of issues were Islamic-based financing instruments.
MARC notes an improved acceptance of dual ratings in which about RM65.0 billion of MARC’s rated bonds programmes were dual rated in 2007. MARC’s Chairman, Encik Mohammad Abdullah, was quoted as saying, “Dual ratings are a positive development in the domestic bond market. It promotes transparency and balanced credit opinions. MARC encourages financial institutions as well as corporates to adopt dual issuer and issue ratings for the benefit of the investing community.”
Looking ahead, the ringgit bond market is expected to remain robust in 2008 notwithstanding the turbulence in global credit markets. MARC has forecasted that new bonds issuance in 2008 to reach between RM45 and RM50 billion in value terms supported by public and private investment in the various economic development corridors, capital expenditures in the oil and gas as well as plantation sectors and foreign issuers tapping our highly liquid ringgit bond market.
MARC opines that the Malaysian economy will remain resilient in 2008 despite an anticipated slowdown in the global economy. Slower expansion in major developed economies in the US, EU and Japan will be offset to some extent by continued strong growth in emerging economies, particularly China and India.
MARC’s GDP growth forecast in 2008 for the Malaysian economy is 5.9%. The impetus for growth will likely come from domestic demand, namely government development spending, consumer spending and private investment. MARC believes that the Malaysian economy is well placed to weather the present political uncertainties. However, some downside risks may be posed by delays in implementing mega projects already announced, higher than expected inflation and sharper than anticipated deterioration in export performance.
Following our successful rebranding exercise in 2007, MARC’s theme for 2008 is “transforming to meet challenges.” It is consistent with our renewed vision of becoming a reputable provider of independent ratings and research and our mission of delivering superior rating opinions. Our record earnings bear testimony to the market’s confidence in MARC and its continued transformation as well as commitment to deliver ratings with Clarity & Integrity.