KUALA LUMPUR, Sept 5 — RAM Rating Services Bhd is anticipating corporate bond issuance to remain sturdy in the second half of 2017 (2H2017), after the 41.7 per cent, year-on-year, jump to RM 54.8 billion in the first half, fuelled by issuers from the infrastructure and financial-services sectors.

The rating agency said the Malaysian corporate bond market could breach the average top-end issuance value of RM80 billion of the last four years.

"All in all, we project gross issuance for the year to come up to between RM95 billion and RM105 billion,” it said in a statement today.

RAM Ratings’ latest default and rating-transition study indicated a slowing pace of negative rating action.

In the first six months of the year, there was only one downgrade out of 181 rated issuers (1H 2016: four issuer downgrades).

Concurrently, the magnitude of downgrades was less severe, averaging 1.2 rating notches (end- June 2016: 1.6 notches).

This improvement was mainly in line with the uptick in the domestic economy, with gross domestic product (GDP) growth clocking in at a stronger-than- expected 5.7 per cent in 1H 2017.

The rating agency recently revised its GDP growth forecast for 2017, from 5.2 per cent to 5.4 per cent, its second upward revision this year.

"Looking ahead, we do not expect any major deterioration in the credit quality of our rated portfolio.

"While the number of ratings, with a negative outlook, still trumped those with a positive outlook (at a rate of 3:1), we expect overall net rating action to gradually improve as economic growth gathers momentum,” added the rating agency. 

As at end June 2017, about 85 per cent of RAM’s outstanding rated securities carried at least AA ratings, underscoring the high credit quality of the rated portfolio and the low risk of default associated with these ratings. — Bernama