RAM Rating said its rated portfolio profile remains strong, with roughly 80% carrying AA3 or higher ratings, indicating a strong ability to meet debt obligations on time.
The rating agency stated in a statement that, on a broader level, the recent performance of Bursa Malaysia-listed companies indicates corporate balance sheets remained healthy in the first quarter of 2022, with 60% registering year-on-year profit growth while maintaining conservative leverage (median: 0.21 times).
Malaysia's GDP grew 6.9 percent in the first half of 2022 (H1 2022), exceeding expectations (H1 2021: 7%), on the back of strong domestic recovery and sustained exports.
“The job market remains sanguine with spare capacity. Meanwhile, domestic inflation, though rising, remains manageable due in part to price controls. These should propel the economic growth this year.
External Economic headwinds
“On the other hand, external headwinds continue to loom,” it said in a statement on the sideline of the release of its latest Corporate Default and Rating Transition Study.
The study provides an update on the credit performance of RAM’s rated corporate portfolio in H1 2022.
According to RAM Rating, the risk of a global slowdown, spiralling inflation, and continued supply chain disruptions caused by Chinese lockdowns and the Russia-Ukraine war could weigh on domestic growth in H2 2022.
RAM's rating actions, including outlook revisions, remained negative for H1 2022, with three negative actions (one downgrade and two outlook revisions) to only one upgrade.
“Looking ahead, net rating action could still linger in the negative as issuers with negative outlooks continue to outnumber those with positive outlooks 3:1 as at end-June 2022.
“Only a limited number (less than two per cent) are deemed at higher risk of default although these issues are mostly guaranteed, cushioning investors’ losses in the event of default.