Moody’s: Malaysia’s A3 supported by very high economic strength

KUALA LUMPUR: Malaysia’s credit profile (issuer rating A3) is supported by the sovereign's “Very High (-)” economic strength, which reflects a large and diverse economy that is growing at a relatively strong pace and  boasts high levels of competitiveness, says Moody’s Investor Service.

In its report issued on Tuesday, the rating agency also said Malaysia’s “High (+)” institutional strength reflected a credible monetary policy framework, “but pervasive corruption and some constraints to government effectiveness”. 

It assessed Malaysia's fiscal strength at "Moderate", taking into consideration a high debt burden, weak debt affordability, and a narrow revenue base that is reliant on oil and non-tax revenues.
However, this is balanced by a favourable structure, that is reliant predominantly on local-currency denominated funding. 

Moody’s said Malaysia's susceptibility to event risks is  "Moderate (-)", driven by external vulnerability risks on account of the  economy's exposure to volatile capital flows and a high proportion of maturing external debt liabilities relative to foreign exchange reserves.

It issued the report after reviewing all of its ratings periodically in accordance with regulations. 

Moody's conducts these periodic reviews through portfolio reviews in which Moody's reassesses the appropriateness of each outstanding rating  in the context of the relevant principal methodology(ies), recent  developments, and a comparison of the financial and operating profile to  similarly rated peers.