KUALA LUMPUR: MARC Ratings Bhd has affirmed its financial institution (FI) rating of AAA on Credit Guarantee Corporation Malaysia Bhd (CGC) with a stable outlook.
In a note today, the agency said the rating is driven by CGC's status as a development financial institution (DFI) with an explicit public policy role, underpinned by the support provided by the government through Bank Negara Malaysia, its key shareholder with a 78.6 per cent interest.
"As such, we continue to incorporate a very high level of systemic support from Bank Negara," it said.
CGC provides credit guarantees on loans and financing extended to micro, small and medium-sized enterprises (MSMEs) by participating financial institutions (PFIs).
At the end of the first half (1H) of 2022, CGC's guaranteed net loans stood at RM15.1 billion, with the growth coming from funds channelled to the MSME sector.
This includes the Targeted Relief and Recovery Facility (TRRF), which was initiated by Bank Negara and has remained the key contributor to the growth of net loans guaranteed.
MARC said that regardless of TRRF and other one-off programmes that have boosted the size of guaranteed loans in recent years, Portfolio Guarantee (PG) and Wholesale Guarantee (WG) schemes remain CGC's key products, accounting for a combined 86.3 per cent of guaranteed loans in 1H 2022.
"Under the PG and WG schemes, CGC provides guarantees with various coverage levels on new and existing loans of PFIs. This approach has allowed CGC to mitigate guarantee risks," it added.
Meanwhile, MARC said CGC generated a one-off gain from the disposal of its 50 per cent stake in Danajamin Nasional Bhd, amounting to RM440.1 million in 2021.
"The proceeds have been placed in a special reserve account and will be used for its growth and contingency purposes," it said.