MARC: Corporate bond issuers firm at 95.7pc stability ratio

KUALA LUMPUR: Malaysian Rating Corporation Bhd’s (MARC) portfolio of corporate bond issuers remained steady last year, with a stability ratio of about 95.7 per cent, despite the slump in economic growth due to the Covid-19 pandemic.

According to the rating agency’s 16th annual corporate default and rating transitions study, the rate was similar to that in 2019 and higher than the longterm average of 87.2 per cent.

This was due to the high concentration of high-grade corporates in MARC’s portfolio, representing 91.4 per cent of total corporates last year compared with 91.3 per cent in 2019.

“Although there has been weakening in their credit profiles, they retained sufficient headroom in their respective ratings,” it said yesterday.

MARC said its corporate portfolio experienced three downgrades last year, with the downgrade rate remaining constant at 4.3 per cent, below the long-term average of 5.9 per cent.

The downgrades were due to pre-existing industry-specific overcapacity issues and project delays being exacerbated by the pandemic and lockdowns.

There were no upgrades nor defaults recorded last year, said MARC.

It said that for three years since 2017, there were no defaults recorded in MARC’s rating.

The long-term annual corporate default rate for the 2000 to 2020 period fell to 1.8 per cent compared with 1.9 per cent for the 2000 to 2019 period.

Meanwhile, MARC said its rating accuracy continued to exhibit improvement.