Moody's affirms Cagamas Berhad's A3/P-2 issuer ratings; outlook stable

Transcription

1. 12 /12/2018 about:blank Rating Action: Moody's affirms Cagamas Berhad's A3/P­2 issuer ratings; outlook stable 11 Dec 2018 Singapore, December 11, 2018 ­­ Moody's Investors Service has affirmed the A3 local and foreign currency long­term issuer ratings, and Prime­2 (P­2) local and foreign currency short­term issuer ratings of Cagamas Berhad. The ratings outlook is stable. At the same time, Moody's has affirmed the (P)A3 foreign currency senior unsecured medium­term note (MTN) program ratings of Cagamas Global P.L.C. and Cagamas Global Sukuk Berhad, as well as the A3 foreign currency senior unsecured debt ratings of Cagamas Global P.L.C. Both Cagamas Global P.L.C. and Cagamas Global Sukuk Berhad are wholly­owned subsidiaries of Cagamas Berhad, and their principal activity is to raise funds for Cagamas Berhad. These rating actions follow the publication of Moody's new Finance Companies rating methodology, which is the primary methodology that Moody's uses to rate finance companies globally, except in jurisdictions where certain regulatory requirements must be fulfilled prior to the new methodology's implementation. Moody's applies its Finance Companies rating methodology to derive Cagamas Berhad's standalone credit assessment of baa1. Moody's has also withdrawn the outlooks on the existing instrument ratings of Cagamas Berhad and Cagamas Global P.L.C for its own business reasons. The withdrawal has no impact on the rating outlook for Cagamas Berhad. Over the course of the next year, Moody's will be withdrawing all instrument level outlooks for entities rated under the Finance Companies Rating Methodology. Please refer to the Moody's Investors Service's Policy for Withdrawal of Credit Ratings, available on its website, www.moodys.com. Moody's also changed the outlooks on Cagamas Global P.L.C and Cagamas Sukuk Berhad to "no outlook" from stable, because these companies have not been assigned issuer ratings. For a full list of affirmed ratings, please refer to the end of this press release. RATINGS RATIONALE Moody's rating actions on Cagamas Berhad, Cagamas Global P.L.C., and Cagamas Global Sukuk Berhad follow the publication of Moody's new Finance Companies rating methodology that is used to assess the company's standalone credit assessment. The changes and enhancements from Moody's previous rating methodology for rating finance companies include the introduction of new financial ratios such as a net charge­offs ratio and a debt maturity coverage ratio, the dynamic weighting of operating environment conditions that can adversely influence firms' creditworthiness, and the incorporation of specific qualitative factors as direct notching adjustments to ratings. CAGAMAS BERHAD The A3 long­term issuer ratings incorporate Cagamas Berhad's baa1 Baseline Credit Assessment (BCA) and Moody's expectation of a very high probability that Cagamas Berhad will receive support from the Government of Malaysia (A3 stable) in times of need. This expectation results in a one­notch rating uplift from Cagamas Berhad's baa1 BCA. The baa1 BCA reflects Cagamas Berhad's track record of strong capitalization, above industry average asset quality, and stable profitability. Moody's expectation of government support for Cagamas Berhad is based on the company's: (1) unique policy role in Malaysia since its establishment in 1986; (2) close linkages with the central bank and the government; as well as (3) high systemic importance in the Malaysian financial sector, given its significant linkages with other Malaysian financial institutions and its prominent role in the domestic debt capital markets. Cagamas Berhad's issuer ratings and outlook are in line with the Malaysian government's sovereign rating and outlook, and are likely to move in tandem with any movement in the sovereign's rating and outlook. The company reported a Common Equity Tier 1 capital ratio of 27.4% at 30 June 2018, well above its internal minimum requirement of 15%. Its gross 90­day past­due asset ratio at 31 December 2017 registered 0.3%. The ratio compares favorably with the weighted­ average gross impaired loan ratio of 1.1% for rated Malaysian banks. Profitability has been stable over the past three years, supported by steady business growth, low credit costs and discipline in cost management. The BCA also takes into consideration the company's reliance on wholesale market funding, which is somewhat buffered by its funding strategy to closely match the duration and maturity of its assets and liabilities. about:blank 1/5
2. 12 /12/2018 about:blank Cagamas Berhad — established by Bank Negara Malaysia, the central bank of Malaysia — commenced operations in 1987 as Malaysia's national mortgage corporation to support the national objective of increasing home ownership and promoting the development of Malaysia's debt capital markets. CAGAMAS GLOBAL P.L.C. The (P)A3 senior unsecured MTN program rating and the A3 senior unsecured debt ratings are positioned at the same level as the A3 long­term issuer rating of Cagamas Berhad. The notes issued out of the MTN program are fully and unconditionally guaranteed by Cagamas Berhad. The notes represent direct, unsubordinated and unsecured obligations of Cagamas Berhad. As such, they rank pari passu with Cagamas Berhad's existing and future unsecured and unsubordinated obligations. Moody's has analyzed the guarantee provided by Cagamas Berhad for the MTN program, and has concluded that the terms and conditions of the guarantee satisfy Moody's core principles for guarantees. CAGAMAS GLOBAL SUKUK BERHAD The (P)A3 rating assigned to the foreign currency senior unsecured sukuk issuance program is in line with Cagamas Berhad's A3 foreign currency long­term issuer rating. The sukuk certificates issued from the sukuk issuance program will represent Cagamas Berhad's direct, unsubordinated and unsecured obligations. As such, they will rank pari passu with Cagamas Berhad's existing and future unsecured and unsubordinated obligations. The rating also reflects Moody's opinion that the sukuk certificate holders effectively have a claim against Cagamas Berhad, ranking pari passu with other senior unsecured obligations. Similarly, the sukuk certificate holders are not exposed to the performance risk of the sukuk assets and do not have preferential claim or recourse over the sukuk assets, or rights to cause any sale or disposition of these assets, except as expressly provided under the transaction documents. WHAT COULD CHANGE THE RATING UP/DOWN Moody's will upgrade the A3 and (P)A3 ratings if Moody's upgrades the Malaysian government's A3 sovereign rating, assuming Cagamas Berhad's standalone credit metrics remain robust. But Moody's could downgrade the ratings if: (1) Moody's downgrades the Malaysian government's sovereign rating; (2) severe losses on Cagamas Berhad's mortgage assets erode a significant portion of its capital; and/or (3) the company expands aggressively, stretching its capitalization and liquidity. A material increase in short­term debt would also be negative for Cagamas Berhad's ratings. The methodologies used in these ratings were Finance Companies published in December 2018, and Government­Related Issuers published in June 2018. Please see the Rating Methodologies page on www.moodys.com for a copy of these methodologies. Cagamas Berhad, headquartered in Kuala Lumpur, reported total assets of MYR44.4 billion ($11.0 billion) at 30 June 2018. Cagamas Global P.L.C., incorporated in Labuan, is a wholly­owned subsidiary of Cagamas Berhad, and its principal activity is to serve as a fund raising vehicle of Cagamas Berhad. Cagamas Global Sukuk Berhad, incorporated in Malaysia, is a wholly­owned subsidiary of Cagamas Berhad, and its principal activity is to serve as a fund raising vehicle of Cagamas Berhad. List of affected ratings Cagamas Berhad ­ Long term local and foreign currency issuer ratings affirmed at A3, outlook is withdrawn ­ Short term local and foreign currency issuer ratings affirmed at P­2 ­ Outlook is stable Cagamas Global P.L.C. ­ Long term foreign currency backed senior unsecured MTN rating affirmed at (P)A3 ­ Long term foreign currency backed senior unsecured debt ratings affirmed at A3, outlook is withdrawn ­ No outlook assigned Cagamas Global Sukuk Berhad ­ Long term foreign currency backed senior unsecured MTN rating affirmed at (P)A3 ­ No outlook assigned about:blank 2/5
3. 12 /12/2018 about:blank REGULATORY DISCLOSURES For ratings issued on a program, series or category/class of debt, this announcement provides certain 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 certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain 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. For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity. Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review. 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. Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating. Simon Chen   Vice President ­ Senior Analyst   Financial Institutions Group   Moody's Investors Service Singapore Pte. Ltd.   50 Raffles Place #23­06 Singapore Land Tower     Singapore 48623   Singapore   JOURNALISTS: 852 3758 1350 Client Service: 852 3551 3077     Graeme Knowd MD ­ Banking     Financial Institutions Group   JOURNALISTS: 852 3758 1350 Client Service: 852 3551 3077     Releasing Office:   Moody's Investors Service Singapore Pte. Ltd.   50 Raffles Place #23­06 Singapore Land Tower     Singapore 48623   Singapore   JOURNALISTS: 852 3758 1350 Client Service: 852 3551 3077     © 2018 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.     CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND ITS RATINGS AFFILIATES (“MIS”) ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT­LIKE SECURITIES, AND MOODY’S PUBLICATIONS MAY INCLUDE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT­LIKE SECURITIES. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL, FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY’S OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL­BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. CREDIT RATINGS AND MOODY’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY’S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY’S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY about:blank 3/5
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5. 12 /12/2018 about:blank policies and procedures to address the independence of MIS’s ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”     Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors. It would be reckless and inappropriate for retail investors to use MOODY’S credit ratings or publications when making an investment decision. If in doubt you should contact your financial or other professional adviser.     Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a whollyowned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.     MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any rating, agreed to pay to MJKK or MSFJ (as applicable) for appraisal and rating services rendered by it fees ranging from JPY200,000 to approximately JPY350,000,000.     MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.   about:blank 5/5