RAM Ratings reaffirms CGIF’s AAA ratings

Published on 21 Jan 2022.

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RAM Ratings has reaffirmed Credit Guarantee and Investment Facility’s (CGIF or the Fund) AAA/Stable/P1 insurer financial strength ratings on the global, ASEAN and national scales. 

The reaffirmation reflects CGIF’s policy mandate to develop the regional bond market as well as the sponsorship and continued support of its capital contributors – the governments of China, Japan, Korea and the ten ASEAN countries (collectively, ASEAN+3) and the Asian Development Bank. 

The ratings also consider CGIF’s still-sound financial metrics despite a THB2.78 bil (or USD83 mil) default by KNM Group Berhad in 4Q 2021 – the first in the Fund’s portfolio since its inception. Net of reinsurance arrangements, CGIF’s exposure to the oil and gas issuer stood at around USD62 mil. While the amount of additional provisions required has not been determined, this will crimp the Fund’s earnings for fiscal 2021. Its leverage will however stay largely intact at 1.3 times as at end-December 2021, well within the 2.0 time-limit for its ratings. CGIF continues to maintain a conservative investment appetite while keeping its liquidity profile robust. Highly liquid assets totalled USD1.3 bil as at end-June 2021, providing the Fund with a comfortable buffer to meet potential claims. 

CGIF’s modest portfolio and monoline focus exposes it to some degree of concentration risk. The Fund is sufficiently diversified by sector. Although it has a relatively large exposure to Vietnam (29%) and Thailand (19%), geographical concentration has reduced in recent years. As a prudent risk management practice, the Fund has sector and country limits to mitigate concentration risk. CGIF has enhanced credit assessments and actively monitors its insured portfolio, given that operating conditions remain difficult for most countries. We expect the Fund’s financial metrics to stay manageable amid pandemic-led headwinds that have affected companies under its guaranteed portfolio.

Analytical contacts
Chow Kah Mun
(603) 3385 2501

Wong Yin Ching, CFA
(603) 3385 2555


The credit rating is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment on the security’s market price or its suitability for a particular investor, nor does it involve any audit by RAM Ratings. The credit rating also does not reflect the legality and enforceability of financial obligations.

RAM Ratings receives compensation for its rating services, normally paid by the issuers of such securities or the rated entity, and sometimes third parties participating in marketing the securities, insurers, guarantors, other obligors, underwriters, etc. The receipt of this compensation has no influence on RAM Ratings’ credit opinions or other analytical processes. In all instances, RAM Ratings is committed to preserving the objectivity, integrity and independence of its ratings. Rating fees are communicated to clients prior to the issuance of rating opinions. While RAM Ratings reserves the right to disseminate the ratings, it receives no payment for doing so, except for subscriptions to its publications.

Similarly, the disclaimers above also apply to RAM Ratings’ credit-related analyses and commentaries, where relevant.

Published by RAM Rating Services Berhad
© Copyright 2022 by RAM Rating Services Berhad

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