Published on 26 Oct 2020.
RAM Ratings today released an updated criteria paper on assessing credit risks of state governments and their application to the rating of state-government-linked entities. In line with RAM’s thought leadership role, we have, for the first time, published in this paper our approach for rating Malaysian local governments comprising city, municipal and district councils.
Federal, state and local governments represent the three tiers of government that collectively form the Government of Malaysia (GoM). Malaysia’s centralised government framework ensures tight inter-governmental linkages. This limits the divergence of lower-tier government ratings from the GoM’s AAA rating. Nonetheless, there are significant intra and inter-governmental differences in economic structure, financial positions as well as political and institutional settings for second and third-tier governments. The hierarchical system of authority and provisions of the Constitution also require a different approach for rating debt and general payment risks of lower-tier governments.
For further details, please refer to Rating State and Local Governments of Malaysia, which is available at www.ram.com.my.
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