Business

Saturday May 16, 2009

Danajamin starts ops

By YVONNE TAN


PETALING JAYA: The Government has established the country’s first financial guarantee institution (FGI), Danajamin Nasional Bhd, which has the capacity to guarantee up to RM15bil of bonds, in a move to provide greater access for local companies to raise funds in the bond market.

The chairman of the institution is Datuk Seri Abdul Hamidy Abdul Hafiz, the former CEO of Affin Bank Bhd, according to a Danajamin statement yesterday.

This confirms a StarBiz report on April 2 which stated that Hamidy, who is also former managing director of national asset management company Pengurusan Danaharta Nasional Bhd, was being considered for the post.

Other board members comprised Datuk Mohammed Hussein, Datuk Mohd Hanif Sher Mohamed, Datuk Albert Yeoh Beow Tit, George Ratilal, Philip Tan Puay Koon, Nik Mohd Hasyudeen Yusoff and Abdul Kadir Md Kassim, the statement said.

Datuk Seri Abdul Hamidy Abdul Hafiz

The CEO had been identified and would be announced within the next month, it added.

Danajamin, which began operations yesterday and was launched as part of the country’s second stimulus package, is owned by the Government.

It has an initial paid-up capital of RM1bil. This would be raised to RM2bil if necessary, a statement from the Prime Minister’s office said.

Danajamin has been rated AAA by RAM Rating Services Bhd and Malaysian Rating Corp Bhd, the country’s two risk assessment companies.

Bonds insured by Danajamin would enjoy a AAA rating and the move would ensure the flow of credit in the financial system to businesses, it said.

“The credit enhancement will ensure lower-rated companies have access to source of funds from the bond market,” RAM Holdings Bhd group chief economist Dr Yeah Kim Leng told StarBizWeek.

The enhancement would also help those with lower-rated credit ratings to cut their funding costs, dealers said.

At the onset, Danajamin has the capacity to insure up to RM15bil of investment-grade private debt and Islamic securities. Priority will be given to new issues that will fund new investments or projects that have strong multiplier effects.

Corporate bond sales now account for 58% of financing in the local capital markets against 21% in 1998 following the Government’s various reforms and initiatives to enhance the role of the bond market in the economy.

  • E-mail this story
  • Print this story