MARC has assigned a final rating of AAA(bg) to Boustead Holdings Berhad's (Boustead Holdings) RM1.0 billion Bank Guaranteed Medium Term Notes (BG MTN) Programme. The outlook on the rating is stable.

The initial issuance proceeds of RM600.0 million under the BG MTN Programme would be backed by bank guarantees from Public Bank Berhad (PBB) for up to RM250.0 million, OCBC Bank (Malaysia) Berhad (OCBCM) for up to RM270.0 million and The Bank of East Asia (BEA) Labuan Branch for up to RM100.0 million. All three banks are rated AAA/stable by MARC. The final rating assigned to the BG MTN Programme reflects the credit strength of the bank guarantors. Full details on the assigned rating have been provided in MARC’s preliminary rating announcement on Boustead Holdings dated November 2, 2010.

PBB is the second largest commercial bank in Malaysia with a significant domestic franchise through a network of 248 branches spread across Malaysia and a further 109 branches in international markets such as Hong Kong, China, Cambodia, Vietnam, Laos and Sri Lanka. MARC’s public information financial institution rating of PBB at AAA/stable is premised on its strong financial metrics as evident from its healthy profitability and strong asset quality as well as its well-entrenched position in the domestic retail banking landscape. Historically high dividend payouts and focus on return on equity (ROE) have, however, resulted in a lower-than-peer core capital position.

OCBCM has been operating in Malaysia for 70 years and is one of the well-established foreign banks among its peers, which include HSBC Bank Malaysia Berhad, United Overseas Bank (Malaysia) Berhad and Standard Chartered Bank Malaysia Berhad. The bank has a network of 29 branches nationwide. Its parent company is Oversea-Chinese Banking Corporation Limited of Singapore (OCBC Singapore), which is ranked as the second largest bank in Singapore based on the latest third quarter results. MARC’s public information financial institution long term rating of OCBCM at AAA/stable is based on MARC’s revised methodology for rating domestically incorporated banking subsidiaries of foreign banks and the rating agency’s opinion of the strength of the parent/subsidiary relationship between the OCBC Singapore and OCBCM. OCBCM’s rating incorporates the financial strength of OCBC Singapore (rated AAA/stable by MARC) and MARC’s opinion that OCBC Singapore would have a very strong propensity to support OCBM’s operations and financial obligations on a timely basis.

BEA was founded in 1918 as a family-owned bank and is one of Hong Kong's oldest local banks and currently ranks as the fifth largest bank in Hong Kong by assets size. The bank which is listed on The Stock Exchange of Hong Kong has relied on organic growth through continued branch network investments to build its franchise in China, where its presence dates back to 1920. BEA received approval to set up a locally incorporated bank in China in 2007, known as The Bank of East Asia (China) Limited (BEA China). It has the second largest distribution network in China among the locally incorporated foreign banks. MARC’s financial institution rating of BEA at AAA/stable reflects MARC's assessment of the bank's capacity to meet its financial obligations on our national rating scale. The rating incorporates BEA's established banking franchise in Hong Kong and mainland China, its very strong asset quality metrics, sound capitalisation and historically prudent risk appetite. It also takes into account the challenges posed by intense competition and regulatory pressures as well as the potential strain placed on management and capital resources by the continuing rapid growth of BEA's China operations.

Noteholders are insulated from the downside risks in relation to Boustead Holdings’ credit profile by virtue of the bank guarantees. A change in the ratings of one or more of the bank guarantors would result in a change of the BG MTN rating.

Contacts:
Mac Lai Yew Weng, +603-2082 2280/ lyweng@marc.com.my;
Sabesh Parameswaran, +603-2082 2260/sabesh@marc.com.my;
Ryan Lee Ju Vern, +603-2082 2230/ juvern@marc.com.my;
Francis Xaviour Joe, +603-2082 2279/ fxjoe@marc.com.my.