Malaysian firms have stronger debt protection metrics than ASEAN peers - RAM Ratings

"The average Malaysian firm also has enough cash to support 3.5 months' operating expenses," the credit rating agency said in a statement on Thursday.

Citing its broader analysis of corporates in ASEAN-6 (ASEAN-5 + Vietnam) in its annual Corporate Default and Rating Transition Study, RAM Ratings said although half of the companies listed on Bursa Malaysia still reported weaker earnings of -0.8 per cent year-on-year in the third quarter of 2020 (Q3 2020), their debt protection metrics remained intact.

It said for Q3 2020, the median gearing ratio averaged 0.22 times (ASEAN: 0.38 times), while debt servicing capacity -- measured by the pre-tax earnings-to-debt ratio -- averaged 0.34 times (ASEAN-6: 0.23 times).

"Relative to RAM's benchmarks and ASEAN peers, these metrics are not considered aggressive.

"Moreover, recent sample data for 4Q 2020 results indicate improvements in these measures for both Malaysia and ASEAN-6," it said.

Moving forward, RAM Ratings said the path to Malaysia's full recovery would remain uneven and fragile in 2021, depending much on the success of the country's vaccination programme and the global outlook.

"Swift execution of the inoculation regime and no further outbreaks may lend upside to Malaysia's economic recovery and RAM's gross domestic product (GDP) growth forecast, which currently stands at 5.0 per cent for this year," it said.