The the information of companies that they are


The liberalization of credit rating to bond industry
in Malaysia will increasingly significant role of the discerning investor in
the bond market. It will provide more opportunities for investors to capitalise
on greater liquidity and market participation. However, investors
would not get any protection in their investment without credit rating
requirement especially for those risk-adverse investors. They need to consider
different type of risks such as interest rate risk, inflation risk, credit
risk, liquidity risk, industry risk and market risk when evaluating their bond
related decisions.

So, investors would have accessibility to the
information of companies that they are interested in order to do their own
credit assessment and investment decision making. Issuers are required to be
more transparent and providing the company information of bonds and sukuk that should
be implemented to facilitate investment decision making. Furthermore, some of
the investors who are lack of knowledge in financial strength and
creditworthiness of the companies will still require the independent third
party such as Malaysian Credit Rating Corporation Berhad (MARC) or RAM for
assisting them to monitor and analyse the credit risks of bonds. So, they can notify
and give comments for the investors about the changes in the credit rating of
the bond issuers.

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Companies with very high credit rating will remove
their ratings but they would get the benefits from this liberalization because
the cost of issuing bonds would be reduced. This is good for the issuers to
make the businesses easier because getting a rating will need to charge
expensive credit rating fees by rating agencies. The issuers may save the
credit rating fees in order to pay the extra premium for investors who earned
additional premium to compensate for the absence of credit rating.

Besides, it will also attract foreign issuers as
they are allowed to fully own unit trust management companies in the Malaysia
financial market without any barriers.  

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