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RAM Ratings affirms Gulf Investment Corporation at AAA
Published on 28 Nov 2024.
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 reflect our expectation of extraordinary support from GIC’s Gulf Cooperation Council (GCC) shareholders (particularly the United Arab Emirates, Qatar, Kuwait and Saudi Arabia) if required, given the Corporation’s unique mandate of promoting development in the GCC region.
GIC’s earnings profile is volatile as investments are heavily weighted in cyclical commodities and it holds a large securities book where fair values fluctuate in line with financial markets. In 2023, GIC’s bottom line grew 55%, reaching USD203 mil, as a recovery in equity markets more than offset the lower, yet still strong, contributions from associates. Profit of USD165 mil reported for 1H 2024 (1H 2023: USD145 mil) was partly due to gains of USD34 mil from disposal of investments. In October this year, the Corporation received a non-binding offer to acquire its largest investee company (by both carrying value and contribution). GIC’s concentration risk would ease significantly should this sale materialise.
Low leverage, strong capitalisation and healthy liquidity remain GIC’s key rating strengths, moderating earnings volatility risks. As at end-June 2024, its leverage and tier-1 capital ratios were 1.3 times and 36% respectively, compared to 1.2 times and 30% as at end-December 2022. Given GIC’s conservative risk appetite, we expect these indicators to remain close to current levels.
GIC’s liquidity profile is well supported by sizeable holdings of cash, interbank placements and liquid investments. These totalled USD1.0 bil as at 4 October 2024, comfortably covering the Corporation’s short-term financial obligations of USD708 mil. Liquidity coverage and net stable funding ratios were at healthy levels of 138% and 157%, respectively, as at end-June 2024 (end-June 2023: 121% and 180%).
Analytical contacts
Lee Yee Von
(603) 3385 2503
yeevon@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 2024 by RAM Rating Services Berhad
