[RAM] RAM Ratings affirms CGIF's AAA rating

RAM Ratings has affirmed Credit Guarantee and Investment Facility’s (CGIF or the Fund) insurer financial strength ratings of AAA/Stable/P1.

The affirmation reflects CGIF’s policy mandate to develop the regional bond market as well as the sponsorship and continued support of its capital contributors – the governments of China, Japan, Korea and the 10 ASEAN countries (collectively, ASEAN+3) along with the Asian Development Bank. 

CGIF saw a two-fold increase in the value of guarantees issued  of USD584 mil in the 12-month period ending June 2024, in line with the pickup in the ASEAN+3 bond markets. Net of  redemptions in the same period, the outstanding guarantee portfolio remained flattish at USD1.9 bil.

CGIF’s guaranteed portfolio proved resilient, thanks to its prudent origination strategies and vigilant portfolio management. Since the Fund’s inception, they experienced only two defaults involving a guaranteed exposure of THB4.08 bil (KNM Group Berhad in 2021, alongside XJ International Holdings Co. Ltd.’s , formerly known as Hope Education Group Co. Ltd., in March 2024. While CGIF has fully recovered its exposure on the latter, the prospect of recovery on the former remains uncertain although the Fund is optimistic of a positive resolution. CGIF’s robust capitalisation can comfortably withstand these defaults.

CGIF’s modest portfolio size and monoline focus exposes it to some degree of concentration risk. This risk is moderated by the Fund’s prudential limits on sector, industry and country exposures. While sector diversification is sufficient, exposures to Vietnam (20%) and Thailand (20%) is still relatively large though reduced in recent years. 

CGIF’s liquidity position is strong, with highly liquid assets amounting close to 87% of its guaranteed portfolio as at end-June 2024, allowing it to comfortably meet any potential claims. CGIF’s leverage remained conservative at a low 1.1 times as at end-June 2024, well below RAM’s limit of 5.0 times threshold for an AAA rating.


Analytical contacts
Chew Chiang Lim
(603) 3385 2516
chianglim@ram.com.my

Sophia Lee
(603) 3384 2619
sophia@ram.com.my