RAM Ratings: Bank Pembangunan’s purchase of Danajamin has no impact on AAA ratings


  • Banking
  • Tuesday, 05 Oct 2021

Bank Pembangunan's acquisition of Danajamin Nasional Bhd will allow the enlarged entity to have a greater market impact.

KUALA LUMPUR: Bank Pembangunan Malaysia Bhd’s acquisition of Danajamin Nasional Bhd will allow the enlarged entity to have a greater market impact, cementing its strategic importance, RAM Ratings says.

This corporate exercise reflects the government’s commitment to strengthen the development finance industry by streamlining the public policy mandates of development financial institutions, it said on Monday.

“Both Bank Pembangunan and Danajamin are currently rated AAA/Stable/P1 and our rating assessments already considered the solid backing of the government, anchored by the role of each entity in fulfilling the nation’s developmental agenda,” it said.

As background, Bank Pembangunan provides medium to long-term financing to sectors vital to the country’s socio-economic development.

Danajamin – the national financial guarantee insurer – is tasked with developing the debt capital markets through credit enhancements for bond and sukuk issuances.

“If well executed, the acquisition will yield synergistic advantages given the complementary roles of the entities.

“Post-acquisition, Danajamin will become a wholly owned subsidiary of Bank Pembangunan. Details on the eventual corporate structure and operational integration have not been disclosed at this time,” it said.

Bank Pembangunan will acquire Danajamin’s shares from Credit Guarantee Corporation Malaysia Bhd and Minister of Finance (Incorporated). Slated to be completed in November this year, the exercise will be funded with a combination of cash and issuance of new shares.

“We expect the move to have minimal impact on Bank Pembangunan’s capitalisation. The Bank’s tier-1 and total capital ratios stood strong at 33.4% and 42.6%, respectively, as at end-June 2021.

“Consequently, we do not envisage the corporate exercise to affect the AAA/Stable ratings of Bank Pembangunan’s RM7bil Conventional Medium Term Notes (MTN) and/or Islamic Murabahah MTN Programmes (2006/2036).

“Similarly, we do not anticipate any changes to the respective AAA/Stable and AA1/Stable ratings of the Senior and Subordinated Sukuk under Danajamin’s RM2bil Sukuk Murabahah Programme,” RAM Ratings said.

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 1
Cxense type: free
User access status: 3
Subscribe now to our Premium Plan for an ad-free and unlimited reading experience!

   

Next In Business News

MSM names Mazatul ‘Aini Shahar as CFO
Global semiconductor equipment billings rise 9% in 3Q
Al Rajhi Bank Malaysia launches digital bank
Pertama Digital appoints Saify Akhtar as CEO
Asian shares rise, dollar sways as slowing rate hike looms
KPS to acquire entire stake in MDS Advance for RM85mil
Indonesia November inflation cools further but stays above target
Bursa remains broadly higher at midday
Asia's factory activity shrinks as China lockdown impact widens
Top Builders fails to submit quarterly report, remains suspended

Others Also Read