Business

Monday March 23, 2009

RAM views human capital as important for rating business

By YAP LENG KUEN


RAM Ratings Services Bhd is hiring more analysts in addition to its current 50 analysts.

“We continue to recruit and are looking for two or three more analysts,’’ said CEO Liza Mohd Noor.

“We have a rigorous training programme involving hard (technical) and soft skills as we view human capital to be important in our line of business.’’

Liza Mohd Noor

The global credit rating agencies may have over-stretched themselves, but locally, RAM Ratings ensures that it has adequate staffing with professionals from different backgrounds such as lawyers, engineers and accountants.

“In fact, RAM Ratings may increase the number of new intakes this year in anticipation of a successful roll-out of the recently announced FGI (Financial Guarantee Institution) which is expected to boost demand for rating services,” Liza told StarBiz.

The Government recently proposed the setting up of the FGI that is slated to act as a bond guarantee agency that can provide guarantees for the bonds issued, thereby helping to raise the credit ratings of these issuers.

“We are on an asset acquisition trail but of a different kind – we are looking to enhance our capacity, not just in terms of headcount but also in terms of class and excellence. We seek out thinkers-cum-doers – individuals with inquisitive minds, possess the passion for facts and figures and are analytically inclined,” Liza said.

RAM Ratings continues to invest in its analysts and their professional development.

In addition to on-the-job training, the analysts are also sent for training and workshops conducted by other industry professionals and experts, including those carried out by international credit rating agencies.

“This is to ensure that the firm’s ‘knowledge bank’ remains current and that we continue to be ahead of the ‘know-how’ curve.

“This is important when we operate in a growing market like Malaysia where new structures and new asset classes are often introduced. As a rating agency, we need to ensure that we are always up to the challenge,” Liza said.

With the rapid changes in the world economy, RAM Ratings is keeping a sharp eye on the health of financial institutions as well as corporates.

A lot more stress testing is being conducted presently.

“When we are stress testing the corporates, we are looking at their ability to withstand the next 18 to 24 months, which we regard as a critical period for many given the market turmoil,’’ Liza said,

The analysis shows that most of them will be in a pretty good position to weather the period.

If there is any stress, it will probably come from the corporates in the export-oriented, property and construction, retail, hospitality as well as commodity-based sectors.

Most of those that survived the test were actually those with very strong balance sheets, enough capital and low level of borrowings.

“These are the companies that also have a robust liquidity position, which is a key consideration at a time when their income generating ability is impeded by a difficult business environment,’’ Liza added.

The banks have been generally supportive of their clients as well (in terms of funding and working capital lines), at least from the portfolio of rated companies under RAM Ratings.

“Our surveillance is ongoing. When a company has a bond issue in the market, there is obviously a need for formal surveillance and review. For example, when we look at a company in manufacturing, we have the peer comparison of 19 years (since the establishment of the company).

“That helps us estimate the reasonableness of the projections. Obviously, we expect some volatility in the performance but we look at whether that is within their normal course of business and more importantly, their ability to respond and survive this challenging period,’’ she said.

Liza viewed the the incorporation of the FGI as a timely step in the right direction, saying it will be a boon for the bond market and facilitate access of long-term funds to many deserving corporates, provided it is rolled out with the proper safeguards.

In turn, the corporates can now make the necessary investments in productive assets and boost their long-term competitiveness.

This should boost private investments.

“Moreover, our well-developed domestic bond market can adequately aid such an initiative,” Liza said.

“We look forward to support the FGI in its task to make the bond market accessible to the wider corporate sector by way of providing rating opinions on the underlying obligors as well as credit information such as the default study.”


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