[RAM] RAM Ratings affirms Gulf Investment Corporation at AAA

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