RAM Ratings reaffirms CGIF’s AAA ratings

Published on 13 Dec 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 is premised on CGIF’s policy mandate to develop bond markets in Asia and the sponsorship and continued support of its capital contributors – the governments of China, Japan, Korea and the 10 ASEAN countries (collectively, ASEAN+3) as well as the Asian Development Bank. 

CGIF’s financial profile remains solid despite a default by KNM Group Berhad in late 2021, the first in its portfolio since inception. The Fund had received reinsurance claim amounting to USD21.2 mil and set aside an impairment allowance of USD10 mil for this exposure as at end-December 2021, given earlier expectations of recovery through KNM’s asset disposal plan. This proposed divestment was recently called off, which may necessitate additional provisioning in 4Q FY Dec 2022. That said, we are of the view that CGIF’s overall financial profile is anticipated to remain intact in light of its robust capitalisation and liquidity. CGIF’s leverage was still sound at a low 1.2 times as at end-June 2022, well within the 2.0 time-limit for its ratings. The Fund continues to maintain a conservative investment appetite while keeping its liquidity profile robust. Highly liquid assets of USD1.2 bil provide a large buffer to meet any potential claims. 

In line with the economic recovery in most markets, CGIF’s business traction has gradually picked up. The Fund’s outstanding portfolio stood at USD2.0 bil as at end-June 2022 (end-December 2020: USD1.9 bil). The internal risk rating of its overall portfolio has improved, primarily underpinned by the onboarding of better credits even as some existing bonds were downgraded.

A modest portfolio size and monoline focus expose CGIF to some degree of concentration risk. The Fund is sufficiently diversified by sector. Although it has relatively large exposures to Vietnam (25%) and Thailand (22%), geographical concentration has reduced in recent years. Concentration risks are moderated by the Fund’s prudential limits on sector, industry and country exposures. Risk assessments have been enhanced while credit surveillance of CGIF’s insured portfolio remains frequent. We expect the Fund’s financial metrics to stay healthy and commensurate with the AAA rating threshold amid the still-challenging operating environment.


Analytical contacts
Ho Chian Leng
(603) 3385 2527

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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