[RAM] RAM Ratings affirms MDV's AA3 ratings

RAM Ratings has affirmed Malaysia Debt Ventures Berhad’s (MDV or the Company) AA₃/Stable/P1 corporate credit ratings, alongside the same ratings of its RM2 bil Conventional and Islamic Commercial Papers/Medium-Term Notes Programmes. 

The ratings benefit from an uplift, incorporating our view of a ‘very high’ likelihood of support from the Government of Malaysia. MDV, a technology financier wholly owned by the government through the Minister of Finance (Incorporated) and the Federal Lands Commissioner, is deemed highly strategic to the government, given its importance to the nation’s agenda of nurturing firms in the technology sector. 

Established in 2002, its mandate is to address the funding needs of technology companies – particularly small and medium-sized enterprises – that are unserved or underserved by commercial banks. The strong relationship between MDV and the government has been evident since its inception, with support demonstrated through the partial conversion of the Company’s debt to equity, government guarantees and a sukuk funding cost subsidy. 

MDV’s stand-alone profile reflects its small scale and limited franchise as well as the riskier profile of its targeted segment, with its earnings profile sensitive to impairments and weak asset quality. The Company recorded strong financing growth in FY Dec 2024 (+18.1%), driven by a few sizeable disbursements after seven years of stagnant financing growth. This helped improve its gross impaired financing (GIF) ratio to 29.9% as at end-December 2024 from 38.7% a year earlier, supported also by strong recoveries and the absence of major impairments. Although the ratio is likely to stay elevated, overall asset quality is envisaged to improve further owing to intensified recovery efforts. Including guarantees from Credit Guarantee Corporation, adjusted GIF coverage would be manageable at around 91%. 

Earnings were in the black in fiscal 2024, with a pre-tax profit of RM3.4 mil (fiscal 2023: RM56.6 mil pre-tax loss). Gearing stayed comfortable at 3.4 times as at end-December 2024 (end-December 2023: 3.5 times). MDV’s capital base remains sufficient to absorb potential credit losses should financing quality deteriorate. 


Analytical contacts
Sean Lim, CFA
(603) 2708 8253
sean@ram.com.my

Jeremy Noel Paul
(603) 2708 8230
jeremynp@ram.com.my

Media contact
Sakinah Arifin
(603) 2708 8212
sakinah@ram.com.my