KUALA LUMPUR (Aug 15): A review of RAM Rating Services Bhd's rated portfolio — carried out in conjunction with the agency's default and rating-transition study for the first half of 2016 — shows the continuation of a negative bias in its rating actions.

"Indicators tracking the rating movements remained in negative territory amid the raft of economic headwinds on both the domestic and global fronts," the rating agency said in a statement.

It said there were three downgrades but no upgrade in 1H16, compared to two downgrades and two upgrades in 1H15.

Nevertheless, the severity of rating downgrades has moderated to an average of 1.7 notches from 3.3 notches in 1H15, as some issuers' ratings had already transitioned downwards in the previous few quarters, it added.

"On a more positive note, no rated issuer defaulted in 1H16 while 85% of our rated portfolio carried at least AA ratings, highlighting the credit quality of the outstanding bond issues.

"Going forward, we expect the overall credit quality of RAM's rated portfolio to remain fairly resilient despite the challenging environment, although downside risks will still persist through 2H16," said the agency.

After a muted start to the year, the Malaysian corporate bond market performed within expectations in 1H16, reaching a total gross issuance value of RM38.5 billion, compared to RM31.9 billion in 1H15, according to RAM.

"During this period, RAM rated 18 bond facilities amounting to RM47.3 billion from 14 issuers, mainly comprising financial institutions and infrastructure companies.

"For the full year, corporate bond issuance is projected to remain around RM75 billion to RM85 billion, underpinned by the funding needs of national infrastructure projects and budgeted commitments, as well as other public-private partnership projects," it said.