Wednesday, July 01, 2015

The Fitch Rating on Malaysia: What it really means [with updates on Arul's Conversations with Fitch]

Updated, 2/7/15
I'm beginning to see why Najib Razak thinks Arul Kanda is the man to lead the 1MDB. This Royal Military College guy is not letting politicians bully him or 1MDB. Latest, Arul takes on Tony Pua again today, for the umpteenth time. this time telling the DAP man to do what's expected of him as a member of the bi-partisan Public Accounts Committee. Read Arul kept jabbing Tony P's missing punches.

Pay attention to the press statement he issued regarding Fitch's revised credit rating on Malaysia. I like the part where Arul says that as a Malaysian he's proud "that the country has achieved a Fitch Ratings upgrade from negative to stable outlook. This is the result of an independent review by an external party and represents recognition of the growing strength of the Malaysian economy". 

He only tells us about his role at the end of that press statement:
"In relation to 1MDB, we had conversations with Fitch in advance of the upgrade, in which we discussed the company's current situation and provided confidence on the measures being taken. We were open about the challenges we face, outlined our efforts to reduce the company's debt as presented in our rationalisation plan, and provided information on the various actions that have already been taken including the repayment of a RM3.6 billion loan in June.”

“A great man is always willing to be little.”
Ralph Waldo Emerson


Original posting, 1/7/2015


Schoolboy error. Really, what it means is that those guys at Fitch could get things so wrong. Just three months ago, they were telling us that, sorry guys, we are going to downgrade you [Fitch Sees More Than 50% Odds of Malaysia Downgrade on 1MDB, Bloomberg March 18]. The kind of reckless talk that hurt our ringgit and investor confidence:

Concerns Malaysia could be downgraded for the first time since the Asian financial crisis have hurt sentiment in its asset markets with the currency near the weakest in a decade. Fitch had repeatedly warned contingent liabilities such as rising debt at a state investment company [1MDB] were weighing on the rating, contributing to investors souring on the country. - Malaysia Escapes Fitch Downgrade, Bloomberg June 30

Suddenly,  they unapolegetically made a complete reversal on Malaysia's credit rating, citing "improvement in finances". Sure, of course, we believe you. But I wonder how much of Fitch's sudden reversal was influenced by the arrest of Swiss national Xavier Justo for alleged blackmailing 1MDB ex-partner Petro Saudi. 

Oh, btw, according to the Thai police, it's no longer "alleged blackmailing': Justo has admitted to the blackmailing allegation.

24 comments:

Anonymous said...

People dont blackmail for something which is untrue.

IT.Scheiss said...

Well Bro,

Three months ago was three months ago and now is now.

It's like before news of Justo's arrest, we had one perception of 1MDB but now we have another or are trying to understand the extent to which the effects of the 1MDB issue still impacts Malaysia's economy and reputation one way or another given this new revelation.

akaz said...

Salah satu cara meningkatkan balik atau kekalkan Fitch Rating ialah dengan mengurangkan perbelanjaan kerajaan atas subsidi. Dalam kes ini harga minyak sudah naik. Lebihan duit Ito tujuan subsidi, boleh bayar hutang kerajaan. Terima kasih PM.

I LOVE PM.

Anonymous said...

Dear Rocky

Please pass this message to your boss. Escalating living cost is getting out of control. While we suffer (for our own good supposedly) from his poor policies, we are bearing this crazy price increase. He still flies around in his private jets.

So where did the money go?

Najib Razak is the biggest mistake the late Tun Razak ever given us.

I don't get paid for writing this. There is a simmering anger on the ground.

I voted UMNO. No more.

charleskiwi said...

If Fitch is not an acceptable credit agency, why then does anyone take their ratings seriously at all to begin with ?
Especially now that it is rating Malaysia in a better light therefore what ever kind of rating they are giving to Malaysia is being lauded by Najib. Therefore Malaysia should have never just ignored their ratings in the first place or are you suggesting that when their ratings are in favour of Malaysia it should be acceptable and when it is negative then they are talking rubbish. Just ignore them or leave them where it should be.
Your view is typical of the kind of the people you represent, be a responsible journalist for a change. Don't say anything negative just because you have to or instructed to .

Sharul Nizam said...


How about S&P, Moody's ? Without 42 billion iunnecessary loans, I bet the rating can be upgraded to A or even A+. Outlook from negative to stable, who cares? IT's like you are getting a C with 62 points versus C 60 points. Still a C.

Bottomline, nobody is accountable of the unneccesary 42 billion loan. To hide misconduct is not that difficult if you control MOF, Khazanah etc. Refinance here, revalue asset there, poof all losses gone.

Something is wrong somewhere, morally or even criminally, as this is public matter the onus is on the PM not the other way around.

I am done with PM, UMNO and their goons. Dah lah mencuri, suruh kita percaya pulak tu. Another millions of public funds gone nak paksa kita percaya. Disgusting betul.

I believe, if Najib explain properly, we are reasonable people. I guess he won't and he can't, based on this media circus.

Bru said...

Ah, Charleskiwi, so things ARE REALLY looking up for Malaysia!

Cheers, then :-)

Bru said...

Dear IT.Scheiss,

Check out the outlook by Moody's and S&P 3-6 months ago and compare with Fitch and you'll see what I mean. Fitch has stubbornly hold on to the view that Malaysia is on the negative or not stable side despite the fundamentals. Those agencies didn't have to do a sudden or surprise reversal that Fitch had to. Maybe Fitch ought to place more qualified people to cover Malaysia.

Anonymous said...

Rocky rocky

What is the use of POSITIVE rating if the rakyat is suffering. The real test should be from the common people not some couch potatoes reading online materials.

Turun padang, jangan asyik naik jet yg mahal.

IT.Scheiss said...

Dear Bro,

"Check out the outlook by Moody's and S&P 3-6 months ago and compare with Fitch and you'll see what I mean."

Thanks Bro. I should be paying more attention to more of such agencies' reports and see the proverbial forest for the trees, since I've moved beyond speculating about the iPhone 7 launch date or writing a column on whether Satya Nadella's fart smells fragrant or stinks and have turned towards doing things more personally meaningful than attending press conferences, product launches and doing product reviews for IT publications which are on the decline thanks to the very creative destruction brought about by the move of readership online which they have so enthusiastically written about and for which they pay journalists peanuts these days.

Profitability track records, returns on equity, P/E rations, EPS, bullish or bearish Marubozu candlesticks, hammers, inverted hammers, dojis, gravestones, dragonflies, hanging men, shooting stars, falling knives, simple and exponential moving averages, volume and signal lines aside, the fact of the matter is that the FBM KLCI was mostly bearish, having dropped down to 1671 on Monday, to bounce back above the psychological 1700 points yesterday following the encouraging Fitch rating, and to take a lunch break at 1.735.62 points midday today.

So rightly or wrongly, rational or irrational, logically or otherwise, market sentiment and especially foreign and/or institutional investors appear to take Fitch ratings more seriously than the others, and yes, the proverbial forest indeed has an impact upon the individual trees within it to a lesser or greater extent, and it's heartening to see that counter lesser in the red today than on Monday.

Well now that the moon has done a top reversal, it's perhaps appropriate to wish you Selamat Hari Raya Aidil Fitr ahead of the moon emerging from its bottom reversal.

Hopefully too the waning moon will bring some relief to the current hot and dry spell since the sun did its northern reversal above the Tropic of Cancer on the 21st of June, 2015 and is now heading southwards, bringing dramatic weather changes in the process.

And, looking outside,I see a few raindrops on the cement, so Weather.com is right that it will rain today and forecasts rain on Friday and Saturday as well.

And yes! Today is Thursday, and silly me, I thought it was Wednesday.

Anonymous said...

if justo is arrested or not, MoF has bailed out already

http://www.thestar.com.my/Business/Business-News/2015/03/12/MoF-provides-RM950m-standby-credit-facility-to-1MDB/?style=biz

RM950 million can buy how many big bikes Dato'? or how many scholarships for the poor students ? or...

question is will there be more bail out ???
and, it clearly at rakyat's expense :-

http://www.thestar.com.my/News/Nation/2015/05/01/Healthcare-budget-cut-not-a-problem-Subra-Quality-will-not-be-compromised/

Anonymous said...

RockyDin,

pls look deeper beyond the headline, :-

“Fitch continues to believe that the Malaysian sovereign is incurring additional contingent liabilities beyond explicit guarantees because of quasi-fiscal operations of state-owned entity 1MDB,” it said. “Fitch thinks there is a high probability that sovereign support for 1MDB would be forthcoming if needed.”

http://www.bloomberg.com/news/articles/2015-06-30/fitch-keeps-malaysia-rating-unchanged-after-signaling-downgrade

Right now, Malaysia's CONTINGENT LIABILITIES are about 20% of the GDP !! Lu ada faham ka ini Dato' ??

This balooning off-budget debts are getting bigger under this current PM cum $ Min.

Anonymous said...

Rock,

Begini lar .. orang kat bawah ni...org kampung/middle class/pengundi umno da semakin meluat..saya ulang MELUAT!!..kami pedulik aper ttg penarafan fitch ker futch ker..moodys ker moodoos ker..
Ape yg org kat bawah ni pedulik ialah kos belanja harian yg menggila naik..pendapatan isi rumah tak sampai 3 ribu, anak 3, semua sekolah lagi, sekolah tiap tiap bulan mintak duit, gaji tak bertambah, kos hidup bertambah tambah, nak jaga org tua lagi..

Rakyat di suruh bersatu menyokong kerajaan, pada masa yg sama pemerintah tak sedikit berasa segan memerah keringat rakyat membayar hutang yg di buat oleh pemimpin yg lifestyle mcm bintang hollywood..rasuah melata lata, sempadan bolos sepanjang masa..
Come on la rock, org kat bawah tak pedulik pun arul kanda hebat ker tak hebat, org tak nak.tau lar..
Org kat bawah bukan nak dengar pemimpin declare darah dia bukan sebarang berketurunan pendekar.. org kat bawah da semakin MELUAT lar dgn najib..period!!

Anonymous said...

No money to pay syndicate of banks in Singapore, borrow from IPIC, and still crow about it ? It's not a loan but I can't tell you what it is. No money to pay the next 12 month’s interest, ask IPIC to pay, but it's not a loan. Ask IPIC to guarantee repayment of principal, and it's not a loan either......wait, it's a commercial transaction where the stupid gomen indemnifies IPIC for all losses....and it's not a loan.

Anonymous said...

Fitch's upgrade ?. Really? It aint no upgrade lah, it remains A- with stable outlook ( bcoz of GST). An upgrade would be A or A+.

The rakyat that paid GST save the day. Those who consume maggie mee, sardin etc chipped in, not those who eat lobster, salmon, berries etc. So, politicians, pls dont claim credit sangat...

charleskiwi said...

Hi Rocky,

I am not suggesting that Malaysia is either in the negative or positive territories this is because black gold is still oozing out from the ground. Even though it is worth about half of what it used to be, unfortunately all of that was and still is being squandered or corruptly siphoned away by the past and the present Umno leaders. None of the revenues from this have been kept aside for the rainy days, which is typical of Umno and if you think it is things are only getting a bit rough. Wait and see when soon and very soon when there is nothing left coming from the ground and also at the rates all the demands of the Islamic radicals are being met. All the haram revenues Malaysia has been relying on cease to come anymore the entire nation will be in big big trouble.

In fact it wouldn't take very long for the entire country to become like Bangladesh or even worse. Instead of a country for the refugees to come to a lot of Malaysians will be looking to work in foreign countries. Already millions of ex-Malaysians have immigrated, believe me millions more will be or are looking at means to do so right now. What will happen then ? Without the revenues from oil and all the haram activities, how the hell will the once prosperous nation become ? The blessing from this scenario will be no one can turn to corruption to become rich or even to survive.

Anonymous said...

Dato' Akhiruddin

How blind can you be?

When has our media headlines filled with news of factory closing, job retrenchment, sales depleting...? It's people's lives were talking about here not just some ratings agency look see in their crystal ball.

Azman

Anonymous said...

Dato',

Can you comment on latest entry by SatD? Your reply is very much appreciated

Anonymous said...

3 mths ago, they delayed paying. got no money and got to beg, borrow etc etc
now they managed to pay.
what about the next few mths when next payment is due?

all these affect their rating decision.
and just b'cos now fitch decided it is ok, you go praise arul kau kau

there was an issue, there still is an issue and there will be issue over the next few mths
pm himself asked for few mths to solve the 1mdb issues

AND HERE YOU ARE WRITING AS IF EVERYONE ELSE HAD BEEN SO WRONG.
Get real!

Anonymous said...

Spin sumore la
lets see what you have to say now with this latest info

Anonymous said...

http://www.wsj.com/asia

“Malaysian investigators scrutinizing a government investment fund have traced nearly $700 million of deposits into what they believe are the personal bank accounts of Prime Minister Najib Razak, according to documents from a government probe.”

Anonymous said...

Are you sure rakyat is suffering ?
Simple test - daily , weekly ,monthly the road is choking .
Every year the road need to be widened . Now , where does all those car , motor , lorry comes from.

Dont be a stupid idiot la...

PN

Anonymous said...

Dato'

Just go and talk to Government officers in JPM, JPA, MOE, JKR, UKAS, MOF, etc....the theme everywhere is "mengurangkan belanja mengurus kerajaan"

Awang

Anonymous said...

If you tell only one side of the story then you are an Advocate. if you address both sides of the issue then you may be called a Journalist.