RAM Ratings looks global

Daljit Dhesi in Petaling Jaya/The Star
Asia News Network

Petaling Jaya (The Star/ANN) - Malaysia's leading credit-rating agency RAM Ratings Services Bhd is set to make its presence felt worldwide by attracting more foreign issuers and investors with its recently launched global and Asean rating scales.

The new rating scales, the first of its kind by an Asean rating agency, will assess the creditworthiness of companies both in Asean countries and globally.

RAM Ratings chief executive officer Foo Su Yin said that the global initiative would provide companies with an option, especially those with plans to expand regionally and globally, to tap funds.

"At the same time, it will provide a benchmark as well as an indication of how companies fare in terms of credit standing against their Asean or global peers.

"Besides facilitating cross-border deals, the rating scales will help unlock and mobilise savings in the region for companies to grow and expand,'' Foo said during the launch of the global and Asean rating scales.

The new rating scales compare and measure the best companies globally and in Asean for their credit worthiness, namely, their ability to pay on a timely and adequate manner.

RAM Holdings Bhd group CEO Dr K. Govindan said that a regional and global move would facilitate and promote an integrated regional capital market and help channel Asia's massive savings to meet the pressing demand for capital by companies looking to expand abroad.

He stressed that RAM was keen to help companies tap the massive liquidity in the region. Backing his arguments with statistics, he said Asean had US$780 billion (2.34 trillion ringgit) of foreign exchange reserves with China topping that with a whopping $3.3 trillion.

He said the gross national savings in Asia (ex-Japan) was estimated to be around $6.2 trillion in 2012, and it was expected to grow to $8 trillion by 2015.

Besides the mobilisation of funds to emerging economies, he said the move to launch the global and Asean rating scales would boost the sukuk (Islamic bond) market globally and in Malaysia, as the latter was the largest sukuk market in the world in terms of issuance.

More flow of funds from the Gulf Cooperation Council (GCC) countries into Asean, including Malaysia, would be intensified, Govindan said, adding that currently RAM had provided rating services for some of its GCC clients.

According to Foo, one of the reasons RAM decided to go global was to meet the growing call from investors and issuers.

"There is more demand and desire for diversity in opinions, particularly from this region from a credit rating agency that has extensive knowledge and a unique understanding of the Asian and Asean market," she said.

She added that it was not enough for companies to merely expand their operations by taking bank loans. A more effective way would be to issue bonds, which has proved to be more effective.

She said, at the moment, the rating agency had secured some mandates, both local and foreign, for the new rating scales.

She pointed out that one of the strengths of RAM was its capability, which encompassed rigorous rating processes, established methodologies and experienced analysts.

This is attested by the fact that it had, to date, rated over 860 companies, with about 2,000 bond issues and sukuk worth close to $261 billion since 1991.

Apart from that, she said, the rating agency had rated more than 20 foreign entities, among others, from South Korea, Japan, Singapore, Hong Kong, Indonesia, Khazakstan and GCC countries. Last year, seven of the top 10 issues by programme value of rated issuances by RAM comprised foreign issuers.

Govindan said the environment was conducive for the rating house to be a global rating agency, adding that one of the reasons was because developing countries were more comfortable with Asian rating agencies like RAM when intending to tap funds.

Meanwhile, Credit Guarantee and Investment Facility (CGIF) has become the first multilateral institution to be accorded AAA global and Asean ratings.

Its CEO Kiyoshi Nishimura said that with RAM's recognition of its superior credit strength, he was confident companies in Asia that tapped the bond markets with CGIF's guarantees would be able to obtain a lower cost of funding.

In line with a more integrated Asean, RAM also recently published the Leading Asean Sovereigns report. The publication features RAM's credit opinion of South-East Asia's five largest economies and has assigned its inaugural global scale sovereign ratings to Singapore (AAA), Malaysia (A2), Thailand (A3), Indonesia (BBB2) and the Philippines (BB1).

The report highlighted that all five countries displayed economic expansion that had generally outpaced global growth and remained relatively resilient through the financial turmoil experienced by advanced economies in 2009.

It also noted that the region's overall debt burden had substantially been reduced favourably throughout the decade in comparison with other economic regions.