Malaysian Rating Corporation Berhad (MARC) held its 20th Annual General Meeting (AGM) on June 2, 2016. At the meeting, the company announced its results for the financial year ended 31 December 2015.
MARC Chairman Datuk Azizan Haji Abd Rahman, provided an overview of the rating agency’s operating and financial performance as well as the business environment outlook for 2016. Shareholders were informed that the company achieved a consolidated pre-tax profit of RM5.5 million in 2015 (2014: RM5.4 million) on the back of higher total revenue of RM17.2 million (2014: RM16.5 million), providing a return on equity of 6.9%.
“In 2015, MARC completed and assigned new ratings on corporate debt and sukuk programmes amounting to RM36.6 billion,” said Datuk Azizan. He also said, “Ratings on Islamic bond or sukuk programmes continued to form the bulk of MARC’s newly assigned ratings, comprising almost two-thirds of the total number of new rating programmes. Issuers from the infrastructure & utilities and the financial services sector accounted for 27.3% and 54.6% respectively of the total issuance rated during the year under review.”
Datuk Azizan added, “I take great pride in sharing the tangible progress made by MARC towards achieving its corporate vision to provide trusted insights on risk as MARC approaches its twentieth anniversary of operations in 2016.” Datuk Azizan drew attention to the accolades that MARC has won in recent years: Hong Kong-based The Asset named MARC as “Malaysia’s Project Finance Rating Agency of the Year” at the publisher’s Triple A Rating Agency of the Year Awards 2016 and Global Islamic Finance Awards named MARC as “Best Islamic Rating Agency 2014”. These recognitions are testimony to the rating agency’s unwavering commitment and relentless focus on analytical excellence. Since publishing its first project finance rating in 1997, MARC’s ratings have remained an authoritative source of information on a broad range of bond and sukuk-financed infrastructure. MARC also pioneered several firsts in the rating of shariah-compliant sukuk such as the first rated US dollar corporate sukuk listed on the Labuan Exchange and the first rated Islamic asset-backed sukuk based on the Musyarakah principle in the Malaysian debt capital market.
MARC Chief Executive Officer, Mohd Razlan Mohamed, said, “MARC expects the Malaysian economy to expand at 4.4% in 2016, a slightly lower pace than the 5.0% recorded in 2015. Notwithstanding a backdrop of slower economic expansion and increasing global financial market volatility, the agency anticipates that the domestic bond and sukuk markets would continue to play a key role in funding infrastructure and project finance transactions in 2016, with total gross corporate bond issuance forecast to be in the region of RM65 billion to RM75 billion.”
Mohd Razlan commented on the agency’s experience on rating transition during the year under review, where only six downgrades were recorded in 2015. There were no defaults recorded in 2015 compared to one default each recorded in 2014 and 2013. The sector distribution of downgrades in 2015 revealed that the rating downgrades came from the infrastructure, trading/ services, industrial products and property sectors.
At the conclusion of the meeting, shareholders were assured that MARC would continue to raise the bar in analytical excellence and that the rating agency would expand its value-added rating offerings to enhance its brand and reputation as an authority on credit risk analysis. To this end, MARC had published two new rating methodologies during 2015, namely the Investment Manager Rating Criteria and the Rating Approach for Issuances Supported by Third-Party Credit Guarantees.
“On the business as well as financial fronts, MARC is poised to begin its third decade of analytical excellence on a solid foundation,” said Datuk Azizan in concluding the meeting.