KUALA LUMPUR (July 7): Fitch Ratings has today revised Export Import Bank of Malaysia Bhd's (Exim Bank) outlook to "stable" from "negative", while affirming its long-term foreign currency issuer default rating (IDR) at "A−".
In a statement today, Fitch said the rating action follows the revision of Malaysia's outlook to "stable" from "negative" and the affirmation of its "A−" long-term foreign-currency IDR and "A" long-term local-currency IDR.
“Exim bank's IDR and support rating floor (SRF) are equalised with that of the Malaysian sovereign.
“Its ratings, including the support rating (SR) of '1', are underpinned by Fitch's expectation of an extremely high probability of extraordinary state support for Exim bank during times of need,” it said.
Fitch also said this expectation stems from the government's 100% ownership of the bank and Exim bank's unique policy role to support and develop the export-oriented sector, which is an important driver of Malaysia's economy.
“State support has also been demonstrated in the past through capital injections and government funding assistance. The sovereign's ability to provide support is likely to be supported by Exim bank's modest size in proportion to the overall gross development product (GDP) and the domestic banking sector,” it added.
Fitch added that the "stable" outlook on Exim bank's ratings corresponds to the "stable" outlook on the Malaysian sovereign's ratings.
Meanwhile, Exim bank’s senior notes are rated at the same level as its long-term IDR.
The rating agency said this is because the notes constitute direct, unsubordinated and unsecured obligations of the bank, and rank equally with all its other "unsecured and unsubordinated" obligations.
It noted, however, that the bank's IDR, SR, SRF and senior debt ratings are sensitive to a change in Malaysia's sovereign rating.
“They could also be downgraded due to a perceived weakening in the propensity of the sovereign to provide support, although such a scenario is unlikely in the near to medium term,” it added.