(The following statement was released by the rating agency)
Feb 06 - As shaky prospects for the global economy continue,
Malaysia's bond market stands out by becoming the Islamic
finance center for Asia with smart regulation and a growing
ecosystem around Islamic finance, said Standard & Poor's Ratings
Services in a report today, titled "Development Of Malaysia's
Bond Market Is Still Assured Despite Global Turmoil."
Approximately 70% of Malaysia's domestic debt issuance is in
the form of sukuks (financial certificates, similar to bonds,
that are compliant with Islamic law), making it the world's
largest Islamic bond market with over 60% of global sukuk
issuance originating from Malaysia (foreign currency
A-/Stable/A-2; local currency A/Stable/A-1; ASEAN scale
"Policymakers in emerging markets view Malaysia as a poster
child for bond market development, given that it's now the
fourth-largest bond market in Asia, after Japan, China, and
South Korea," said Surinder Kathpalia, managing director at
Standard & Poor's.
"Malaysia's bond market has a strong infrastructure and a
record of solid growth due to a transparent and predictable
regulatory environment, the availability of independent credit
research, the existence of 'risk-free' bonds of various tenors,
and a bond pricing service," Mr. Kathpalia said.
Standard & Poor's maintains a strong outlook for Malaysia's
bond market, reflecting positive bond market developments,
ongoing growth in Islamic finance, and steady macroeconomic
fundamentals in the country.
Southeast Asian (ASEAN) local currency bond
markets--including Malaysia's--continued to bustle in 2011 with
local currency bond issues, providing alternative funding and
investment options for Asian issuers and investors when
issuances in G3 currencies in Asia stalled.
"It wasn't just ASEAN companies that tapped the markets,
those in Hong Kong, India, and Korea also issued bonds in the
region," said Mr. Kathpalia.
ASEAN companies are likely to continue to seek alternative
funding sources as those in G3 markets (U.S., Japan, and the
eurozone) become harder and more expensive to tap, he added.