MARC Ratings 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 its Sukuk Murabahah programme. Currently, there is an outstanding of RM500.0 million under the rated programme in which Danajamin can exercise a call option to fully redeem the outstanding on October 6, 2022.
The affirmed IFS rating incorporates Danajamin’s status as a government-owned financial guarantee insurer, its strong capitalisation and healthy liquidity position. We note the impending amalgamation of Danajamin with Bank Pembangunan Malaysia Berhad (BPMB) will result in the former’s business and undertakings being transferred and vested in the latter via a business transfer scheme. This is expected to be completed in 4Q2022. Upon the completion of the amalgamation exercise, MARC Ratings will cease to provide analytical coverage on Danajamin.
The growth of Danajamin’s guarantee portfolio has been muted over the years with the outstanding guarantee amount standing at RM2.6 billion (2020: RM3.4 billion). In line with the lower guarantee amount and investment yield, Danajamin’s net revenue declined to RM61.9 million in 2021 from RM76.3 million in 2020. Its capital adequacy ratio remains very strong at over 500% as at end-2021, significantly higher than the minimum regulatory requirement of 130%. Danajamin also has sizeable liquid assets of RM2.5 billion as at end-2021. This notwithstanding, BPMB will be legally bound to honour all of Danajamin’s obligations under the guaranteed bond/sukuk once the amalgamation exercise is completed.