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RAM Ratings affirms Gulf Investment Corporation at AAA
Published on 12 Dec 2023.
RAM Ratings has affirmed Gulf Investment Corporation G.S.C.’s (GIC or the Corporation) AAA/Stable/P1 corporate credit ratings and the AAA/Stable rating of its RM3.5 billion Sukuk Wakalah bi Istithmar Programme (2011/2031).
The ratings continue to incorporate extraordinary support from GIC’s Gulf Cooperation Council (GCC) shareholders (particularly the United Arab Emirates, Qatar, Kuwait and Saudi Arabia), given the Corporation’s unique mandate of promoting the GCC region’s development.
GIC’s fortunes greatly depend on that of its investee companies under the Principal Investments (PI) portfolio – which tends to be volatile due to a fairly high concentration in the cyclical commodity sector – while the performance of its Global Markets (GM) division is subject to the vagaries of the financial markets. GIC posted strong profits of USD131 mil and USD145 mil in 2022 and 1H 2023, respectively (2021 and 1H 2022: profit of USD130 mil and loss of USD9 mil), driven by the record performance of a large investee in the PI book as earnings from the GM book swung from losses in 2022 to gains in 1H 2023 amid sharp yield movements and market volatility. Moving forward, the Corporation’s earnings remain vulnerable to persistent global economic headwinds although yield movements are expected to be milder.
Low leverage, still-sturdy capitalisation and healthy liquidity remain GIC’s key rating strengths, moderating risks from an inherently volatile earnings profile. Its leverage ratio and tier-1 capital ratio clocked in at a respective 1.2 times and 37% as at end-June 2023 (end-December 2021: 1.2 times and 41%). We expect these indicators to stay around current levels as the Corporation intends to maintain a conservative capital structure.
GIC’s liquidity profile continues to be supported by sizeable holdings of cash, interbank placements and liquid investments. These totalled USD801 mil as at end-September 2023 after applicable haircuts – far exceeding the Corporation’s short-term financial obligations of USD574 mil. Liquidity coverage and net stable funding ratios were at healthy levels of 143% and 163%, respectively as at end-December 2022 (end-December 2021: 196% and 171%).
Analytical contacts
Loh Kit Yoong
(603) 3385 2493
kityoong@ram.com.my
Sophia Lee
(603) 3385 2619
sophia@ram.com.my
Media contact
Sakinah Arifin
(603) 3385 2500
sakinah@ram.com.my
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 2023 by RAM Rating Services Berhad
