News Column

RAM Ratings: Investors to become key driver of liberalised Malaysian bond market

June 9, 2014

RAM Ratings believes that the announced removal of mandatory credit rating for bonds and Sukuk in 2017 and other liberalisation measures for the Malaysian capital markets represent the next step in market development.

In the last two decades, the MYR 1 trillion Malaysian bond market - the largest in ASEAN - has been charting impressive growth in terms of market size, depth and breadth. RAM was established in 1990 by Bank Negara Malaysia as part of the institutional infrastructure to support the development of Malaysia's rapidly evolving bond market. The introduction of mandatory credit rating then served as a strong anchor for issuers, investors and other market participants to independently benchmark credit risk and transparently establish pricing.

"Discerning investors will be the key driver of credit ratings in the future, and this will be important for the continuity of pricing transparency. In advanced bond markets, investors view ratings as being essential to their investment decisions," remarks Foo Su Yin, CEO of RAM Ratings. "RAM will continue pioneering credit-rating approaches to support the bond and Sukuk markets," adds Foo. RAM had been the first to rate banks and project-finance transactions in Malaysia, which now constitute the bulk of the domestic bond and Sukuk market

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Source: CPI Financial

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