KUALA LUMPUR: Moody's Investors Service said 1Malaysia Development Bhd no longer poses contingency or systematic risks to the economy.
Its vice president Christian de Guzman, said this was due to the company's recent progress in selling and developing its assets.
1MDB today announced the completion of the sale of Edra Global Energy Bhd to China General Nuclear Power Corp (CGN), marking the end of the Edra monetisation.
1MDB said the monetisation was a significant and tangible milestone of the strategic development company’s rationalisation plan, which was announced by the Finance Ministry on May 29 last year.
Last December, 1MDB announced that China Railway Engineering Corporation Sdn Bhd and Johor-based Iskandar Waterfront Holdings would buy a 60 per cent stake in its Bandar Malaysia land bank for about RM7.42 billion.
Meanwhile, de Guzman expects Malaysia's Gross Domestic Product (GDP) to record 4.4 per cent growth this year, which is near the high side of the government's forecast of between 4.0 to 4.5 per cent.
The projection was based on the country's outlook on exports, investments and consumption that is in line with weaker consumer sentiment for this year.
"Malaysia's sovereign rating outlook remains stable on the back of a fiscal consolidation trend that remains intact.
"The policy response has evolved and the reserves have stabilised in recent months because the central bank has tolerated greater exchange rate flexibility, but the current account balance, while still in surplus, represents a narrower buffer against capital flows," de Guzman told a media briefing on Moody's just-released edition of Inside ASEAN.
The edition also examines the implementation of major policy reforms in Malaysia, which have mitigated the negative impact of lower oil prices on the government's fiscal position.
Moody's noted that external pressures including increased capital flow volatility and consequent exchange rate depreciation have led to a deterioration in Malaysia's growth and external metrics thereby supporting its earlier decision to revise the sovereign rating outlook to stable from positive.
On crude oil, the international rating company is still assuming a lower price regime at an average of US$33 per barrel for this year on oversupply reason, and as shale oil production may act as a ceiling for an oil price increase.
"Liquidity remains strong for national oil company Petronas as it has benefited from the government's high degree of financial flexibility and ability to reduce dividends," he said.
For the ringgit, de Guzman said he is still holding on to an average rate of 4.20 against a US dollar for this year as a revision would be too early,
He also said there is a potential for higher non-performing loans of between one and two per cent for banks this year, as property price correction could pose an asset quality risk. --Bernama