KUALA LUMPUR (Dec 5): Malaysian Rating Corp Bhd (MARC) views corporate Malaysia’s credit fundamentals will remain broadly stable in 2025 underpinned by steady pace of economic growth and benign interest rate environment.

The credit rating agency said even in the event the US-China trade war escalates, it does not expect corporate Malaysia to see any sharp downgrade or sudden spike in the number of defaults.

This is as it maintained its projections of Malaysian gross domestic product at 5% and overnight policy rate at 3% in 2025 amid subsiding global inflationary pressures, it said.

“At the end of the day, wise economic sense will prevail amid the geopolitical noises that we hear,” said MARC’s chief executive officer Rajan Paramesran during the MARC economic and corporate credit outlook 2025 webinar.

MARC also highlighted that the borrowing headroom of corporate Malaysia is broadly available as suggested by the interest and debt metrics.

It also noted that corporates are more focused on their domestic operations with borrowings characterised more by refinancing activities and working capital.

In recent years, there were fewer debt funded acquisitions, it added.

Meanwhile, MARC’s chief economist Ray Choy thinks that global interest rates will enter an easing cycle over the next two years.

The potential narrowing in interest rate differentials between Malaysia and the US could lend support to the foreign exchange market, he added.

Choy also noted that the yen carry trade — one of the main sources of liquidity for investments in the emerging markets — could continue to go on, citing improving net Japanese yen futures positioning and Bank of Japan’s signalling that it is not going to increase interest rates that quickly.

In terms of external trade, Malaysia stands to benefit from broad-based tariffs by the US in the short term.

MARC held positive views on renewable energy (RE) and data centres, citing supportive policy measures on their growth prospects.

It also had a positive outlook rating on healthcare on rising healthcare tourism demand as well as ageing demographic and rising affluence.

In 2025, MARC expects sukuk and bond issuance to increase, with the RE and data centre sectors in the limelight as issuers.

On the other hand, MARC held a negative-to-stable outlook on the property sector despite improving sales transactions in residential properties.

The rating agency views that the declining occupancy levels due to supply-demand mismatch in commercial properties, which constitutes a sizeable portion in the overall property sector, warrants cautious.

It held a stable outlook on palm oil, oil and gas, power, automotive, telecommunications, banking, consumer, infrastructure, and construction sectors.