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

Published on 28 November 2013

RAM Ratings has reaffirmed Gulf Investment Corporation GSC’s (GIC or the Corporation) AAA/Stable/P1 financial institution ratings. Concurrently, the AAA/stable ratings of GIC’s RM3.5 billion Sukuk Wakalah bi Istithmar Programme (2011/2031) and RM400 million Senior Unsecured Bonds (2008/2023) have also been reaffirmed.

GIC’s ratings remain anchored by the strong support from its 6 Gulf Cooperation Council (GCC) shareholders. GIC’s mandate is to support the development of private enterprises and economic growth within the GCC region. The Corporation enjoys immunity and exceptions in terms of regional regulatory norms, including exemptions from asset nationalisation, controls on currency conversion and taxes. 

GIC’s earnings profile remains underpinned by the performance of its large principal investments, which comprise equity stakes in projects within the GCC and account for 40% of its total assets. Although gains from the Corporation’s investments in securities increased in FY Dec 2012, its pre-tax profit of USD131 million (FY Dec 2011: USD182 million) was crimped by its smaller share of its associates’ profits. That same year, GIC’s principal investments contributed 52% of its gross income (FY Dec 2011: 78%). Going forward, the Corporation aims to increase its focus on principal investments, a segment that is anticipated to eventually contribute a steady 75%-80% of its gross income.

While GIC remains reliant on wholesale funding for its business needs, the Corporation’s liquidity profile is healthy and supported by a sizeable portfolio of short-term fixed-income securities and placements with banks. GIC has sufficient liquidity to repay its maturing obligations in its current fiscal year. In addition, its funding profile now includes more long-term funding. Supported by a USD1.1 billion capital injection by its shareholders amid the global financial crisis in 2008/09, GIC’s total capital ratio came up to a robust 34.1% as at end-June 2013. At the same time, its leverage ratio stayed stable and manageable at 2.4 times.

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Joanne Kek

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joanne@ram.com.my