Bangkok--16 May--Standard & Poor's Standard & Poor's Ratings Services revised its outlook on the foreign currency sovereign credit rating on Malaysia to stable from positive. At the same time, the sovereign credit ratings on Malaysia (foreign currency A-/Stable/A-2; local currency A+/Stable/A-1) have been affirmed. "The outlook revision on the foreign currency rating to stable reflects the uncertainty brought about by the drastic change in the overall political landscape after the recent general elections," said Standard & Poor's credit analyst Sani Hamid. "Coming amid a challenging external environment and expectations of a slowdown in growth, prospects for a rating upgrade have diminished over the short term." The ratings on Malaysia reflect the continued improvement to the sovereign's already strong external liquidity position, which remains a linchpin of its credit standing. The country's public sector external debt is expected to decline further to 7.4% of 2008 current account receipts versus 11.2% in 2006. Malaysia has a deep bond market, reducing the reliance on external financing. The government's economic policies are generally pragmatic and market friendly. It has enhanced transparency and corporate governance, thereby helping to improve Malaysia's business environment. "Malaysia's credit standing, however, is constrained by its fiscal position, where its deficit and debt levels are weaker than most of its peers," Mr. Sani added. Another constraint on Malaysia's creditworthiness is the government's contingent liabilities exposure, primarily from domestic credit extended by the financial sector. The stable outlook reflects Standard & Poor's expectation that the government will consolidate its finances only modestly over the next few years. Malaysia's credit standing could come under pressure if the government loosens its fiscal stance to spur growth or if the economy slows materially, resulting in higher net debt. Conversely, Malaysia's credit standing could improve if stronger growth and efforts to rationalize spending result in lower-than-expected deficits and a reduction of government debt. Complete ratings information is available to subscribers of RatingsDirect, the real-time Web-based source for Standard & Poor's credit ratings, research, and risk analysis, at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com; select your preferred country or region, then Ratings in the left navigation bar, followed by Credit Ratings Search. Media Contact: David Wargin, New York (1) 212-438-1579, [email protected] Analyst Contacts: Sani Hamid, Singapore (65) 6239-6346 Elena Okorotchenko, Singapore (65) 6239-6375 Takahira Ogawa, Singapore (65) 6239-6342