S&P affirms Malaysia ratings – with a caveat

KUALA LUMPUR – Standard & Poor’s has affirmed its AA-2 foreign currency and A/A-1 local currency ratings for Malaysia with a caveat: “The affirmation is predicated on our expectations that the 1MDB issues and the upcoming change in Bank Negara leadership will not diminish the effectiveness of policymaking, either in the Executive Branch or at the Central Bank.”

S&P says it believes the Malaysian Government has taken sufficient offsetting measures to compensate for lost hydrocarbon-related fiscal revenue, and that Malaysia’s strong external position and “fairly diverse economy” can absorb some weakness in the oil and gas sector.

The ratings agency adds: “We don't expect to raise the sovereign ratings on
Malaysia this year or next.”

It says depreciation of the ringgit should help the competitiveness of
manufactured goods exports, offsetting some of the impact of weaker terms of trade for Malaysia's energy exports. www.standardandpoors.com (ATI).