Fitch affirm's M'sia 'A' rating but says weaker than other nations
Fitch Ratings has affirmed Malaysia's long-term foreign and local currency Issuer Default Ratings (IDR) at "A-" and "A" respectively with stable outlook but noted the country's positions in certain areas are weaker than other countries in the same category.
"Malaysia's levels of income (at market exchange rates) and development are weaker than 'A' range medians and closer to 'BBB' range norms.
"Governance is also a weakness relative to other sovereigns in the 'A' rating range," it said in a statement today.
Fitch Ratings said: "Malaysian politics and governance standards have come under spotlight due to a range of domestic and international investigations into state-owned investment company 1MDB."
However, it noted that the political heat generated from these issues have not had a discernible impact on the government's policy such as the Goods and Services Tax and the slash in fuel subsidy.
Fitch Ratings has affirmed Malaysia's long-term foreign and local currency Issuer Default Ratings (IDR) at "A-" and "A" respectively with stable outlooks but noted its positions in certain areas are weaker than other countries in the same category.
"Malaysia's levels of income (at market exchange rates) and development are weaker than 'A' range medians and closer to 'BBB' range norms.
"Governance is also a weakness relative to other sovereigns in the 'A' rating range," it said in a statement today.
Fitch Ratings said: "Malaysian politics and governance standards have come under the spotlight due to a range of domestic and international investigations into state-owned investment company 1MDB.”
However, it noted that the political heat generated from these issues has not had a discernible impact on the government's policies such as the Goods and Services Tax (GST) and slash in fuel subsidy.
On the plus side, Fitch Ratings said even though the Malaysian economy is slowing, its growth remains stronger than its 'A' peers.
Fitch Ratings also affirmed Malaysia's 'A' rating for senior unsecured local-currency bonds and Country Ceiling while the Short-Term Foreign-Currency IDR is at 'F2'.
The stable outlooks, said Fitch Rating's, is based on its assessment that the upside and downside risks to the ratings are currently "broadly balanced".
It said the ratings are based on the assumption that the global economy evolves in line with the Fitch's projections and that there will be no sharp, disruptive slowdown in China and no global systemic crisis in emerging markets.
It said Malaysia risks a negative rating action if there is a sustained deterioration in fiscal discipline leading to sharp rise in government debt.
It added that a weakening of the balance of payments that strains domestic economic or financial stability and deterioration in political stability or governance that lead to a weakening of the credibility of policy-making institutions will have similar outcomes.
It said the main factors that can lead to a positive rating are sustained reduction in government debt ratios and narrowing of structural weaknesses relative to peers, including development indicators and governance.
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