Bangkok--6 Jul--Moody's Investors
Moody's Investors Service has assigned a definitive foreign currency rating of A3 to the securities under Malaysia's U.S. dollar-denominated sovereign sukuk.
RATINGS RATIONALE
Moody's definitive rating for these debt obligations confirms the provisional rating assigned on June 22, 2011. Moody's rating rationale was set out in a press release published on the same day.
Malaysia's wakala sukuk issuance was divided into two tranches: US$1.2 billion due 2016 and US$800,000 due 2021. In Moody's opinion, these payment obligations are pari passu with other senior, unsecured debt issuances of the Government of Malaysia and thus justify a rating at the same level.
The Malaysian economy has grown robustly during the recovery from the global financial crisis, supported notably by healthy private consumption and government stimulus. In addition, the pickup in growth across the region and higher commodity prices have bolstered Malaysia's large export sector. Yet inflation remains relatively low and such pressures are being kept in check by central bank policy actions. Despite headwinds from supply-chain disruptions from the March 2011 Japanese earthquake and from a moderation in Chinese demand, Malaysia's growth will continue to be supported in the near-term by domestic demand, particularly as investment spending accelerates under the government's Economic Transformation Programme.
Malaysia's sovereign rating is anchored by the sustained strength in the country's strong external payments position, high savings rates, and deep onshore capital markets. Official foreign exchange reserves stand at
US$133.2 billion, or more than four-times residual short-term external debt, as of June 15, 2011. In addition, the rating is supported by strong and well-managed corporate and banking sectors, which poses only marginal contingent liabilities to the government's balance sheet.
However, structural features of the Malaysia's fiscal framework may put pressures on the long-term sustainability of public finances. The government continues to be reliant on commodity revenues, while expenditure growth has been driven by a ballooning of the subsidy bill.
Tax and subsidy reforms will be needed to better underpin Malaysia's sovereign credit fundamentals relative to its peers.
The principal methodology used in this rating was Sovereign Bond Ratings published in September 2008. Please see the Credit Policy page on www.moodys.com for a copy of this methodology .
REGULATORY DISCLOSURES
For ratings issued on a program, series or category/class of debt, this announcement provides relevant regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides relevant regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides relevant regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.
Information sources used to prepare the rating are the following: parties involved in the ratings, public information, and confidential and proprietary Moody's Investors Service information.
Moody's considers the quality of information available on the rated entity, obligation or credit satisfactory for the purposes of issuing a rating.
Moody's adopts all necessary measures so that the information it uses in assigning a rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.
Please see Moody's Rating Symbols and Definitions on the Rating Process page on www.moodys.com for further information on the meaning of each rating category and the definition of default and recovery.
Please see ratings tab on the issuer/entity page on www.moodys.com for the last rating action and the rating history.
The date on which some ratings were first released goes back to a time before Moody's ratings were fully digitized and accurate data may not be available. Consequently, Moody's provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.
Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.
Singapore
Christian de Guzman
Asst Vice President - Analyst
Sovereign Risk Group
Moody's Investors Service Singapore Pte. Ltd.
JOURNALISTS: (852) 3758 -1350
SUBSCRIBERS: (65) 6398-8308
Singapore
Thomas J. Byrne
Senior Vice President - Regional Credit Officer Sovereign Risk Group
Moody's Investors Service Singapore Pte. Ltd.
JOURNALISTS: (852) 3758 -1350
SUBSCRIBERS: (65) 6398-8308
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JOURNALISTS: (852) 3758 -1350
SUBSCRIBERS: (65) 6398-8308