KUALA LUMPUR (June 24): Ministry of Finance (MoF)-owned SME Bank is issuing up to RM3 billion in Islamic bonds comprising Islamic medium-term notes (IMTNs) and Islamic commercial papers (ICPs), according to Malaysian Rating Corp Bhd (MARC).

In a statement yesterday, MARC said the rating agency had affirmed SME Bank's financial institution rating of AAA. 

"The ratings outlook is stable,” MARC said.

According to SME Bank’s website, the bank established in 2005 is now one of the nation's development financial institutions (DFIs) that is wholly-owned by the MoF and regulated by Bank Negara Malaysia (BNM). 

"SME Bank is fully committed to driving the nation's economic growth by providing not only financing assistance, but also development expertise to small and medium enterprises (SMEs), allowing those businesses to prosper and grow,” "SME Bank said.

MARC said SME Bank's status as a wholly government-owned DFI with a mandate to develop SMEs remains a key rating driver.

While downside risk to capital persists in view of SME Bank’s developmental role, MARC said capital support for SME Bank from the government is expected to be forthcoming if required.

"In terms of funding, the DFI's funding profile remains largely supported by deposits and borrowings from the government and government-related entities as well as by government-guaranteed borrowings and sukuk issuances. 

"These accounted for 77.3% of total funding as at end-9M20 (the first nine months of 2020). SME Bank's status as a DFI has enabled ready access to reliable long-term funding from the government and its related entities,” MARC said.