RAM Ratings reaffirms Gulf Investment Corporation’s AAA/P1 ratings

Published on 20 December 2012

RAM Ratings has reaffirmed Gulf Investment Corporation GSC’s (“GIC” or “the Corporation”) respective long- and short-term financial institution ratings at AAA and P1. Concurrently, the AAA ratings of GIC’s RM3.5 billion Sukuk Wakalah bi Istithmar Programme (2011/2031), RM600 million Senior Unsecured Bonds (2008/2013) and RM400 million Senior Unsecured Bonds (2008/2023) have also been reaffirmed. All the long-term ratings have a stable outlook.

GIC’s ratings remain underpinned by its unique position within the Gulf Cooperation Council (“GCC”) region, and the strong support from its shareholders, i.e. the governments of Kuwait, Saudi Arabia, the United Arab Emirates, Qatar, Bahrain and Oman. GIC’s mandate is to support the development of private enterprises and economic growth within the GCC region. Given its strategic role, the Corporation enjoys immunity and exceptions in terms of regional regulatory norms, including exemptions from asset nationalisation, controls on currency conversion and taxes.

The Corporation’s key investments chiefly comprise strategic-equity stakes in greenfield projects in the GCC region; these typically have long gestation periods and are also fairly illiquid. As GIC depends much on the results of its key investments, and returns on its securities portfolio that are exposed to the vagaries of the financial markets, its financial performance is expected to remain volatile.

GIC is mainly funded through borrowings, which entail refinancing risk. In view of its sizeable maturing debts in 2013, the Corporation had successfully raised USD500 million of funds via a bond issuance in November 2012. Meanwhile, its deposit base is anchored by a few government-linked entities and the central banks of the GCC countries, which have historically been stable funding sources. GIC’s liquidity position is deemed healthy, as evinced by its liquid-asset ratio of 152.0% as at end-June 2012. At the same time, its tier-1 risk-weighted capital-adequacy ratio stood at a solid 31.4%.

Media contact

Peter Kong

(603) 7628 1029

peterkong@ram.com.my