(Petaling Jaya, Monday): After the Malaysian Government signed the US$1.35 billion (RM5.13 billion) loan extended by a consortium of 12 foreign banks in the country last Tuesday, the second Finance Minister Datuk Mustapha Mohamed said it sent a strong signal of the foreign banks’ confidence in the country’s future as the terms are equivalent of a AA credit rating, debunking the rating of several rating agencies.
In June last year, international rating firms Moody's Investors Service
and Standard and Poor's cut Malaysia's rating to just one notch above junk
status, derailing the government’s launch of a global bond issue to fund
Mustapha said the loan reflected that the ratings made by some of the rating agencies were not accurate and proved the point that Malaysia had been grossly underrated, "deliberately perhaps".
``This vote of confidence in Malaysia is very comforting.''
Two days later, officials of Standard and Poor said it would not immediately revise its poor rating of "BBB minus" on Malaysia despite the RM5.13 billion loan from 12 foreign banks.
One Standard and Poor official said: ``We have taken into consideration some of the funding needs of Malaysia. Our outlook on Malaysia is negative.
``Our outlook reflects the higher uncertainty about the direction of the economic policy in this challenging environment. We would review the outlook and the rating if there is credible financial sector reforms.''
One question Malaysians want an answer is whether the government financial adviser Salomon Smith Barney has failed in its mission to win over the international rating agencies and remove their "misconceptions" about the Malaysian economy, as the country has been told that this would be one of the assignments of Saloman Smith Barney which was appointed in September.