1MDB ‘brushes off’ Moody’s credit rating withdrawal
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The company's Energy Notes continue to benefit from a "AA" rating from Standard and Poor's.
KUALA LUMPUR: 1MDB has reiterated in a statement that its liquidity position is strong and the company remains focused on execution of its “successful” rationalization plan.
The company was commenting on Moody’s Investor Services (Moody’s or MIS) withdrawing its rating on the 5.99 per cent USD1.75 billion senior unsecured notes issued by 1MDB Energy Limited (Energy Notes).
Moody’s cited “business reasons” in its announcement on the withdrawal.
1MDB noted the withdrawal was undertaken without a downgrade in Moody’s “Aa2” credit rating for the Energy Notes. Also, said the statement, “the Energy Notes continue to benefit from a ‘AA’ rating from Standard and Poor’s”.
According to 1MDB, Moody’s “Aa2″ credit-rating for the Energy notes remained valid up to the point of rating withdrawal, i.e. the withdrawal was done with no downgrade of the credit rating for the Energy Notes.
The Moody’s “Policy for Withdrawal of Credit Ratings” (document reference SP 13418, effective date 14 December 2015), according to the Notes, states in item II(6):
“Business Reasons: under certain circumstances, MIS will withdraw a Credit Rating for a Rated Entity or an obligation for reasons unrelated to the situations identified above.”
When MIS indicates that a Credit Rating was withdrawn for “business reasons,” this refers to MIS’s business reasons, not the business reasons of the Rated Entity or obligor, 1MDB said.
MIS’s business reasons, in short, generally do not reflect any concerns about the Rated Entity’s creditworthiness or the quality of its management.
1MDB’s statement went on to say that MIS’s decision to withdraw a rating “under these circumstances” will attempt to balance the informational benefit to market participants. This refers to maintaining a Credit Rating “against the resources required” to maintain and monitor that Credit Rating or other business considerations.
The company's Energy Notes continue to benefit from a "AA" rating from Standard and Poor's.
KUALA LUMPUR: 1MDB has reiterated in a statement that its liquidity position is strong and the company remains focused on execution of its “successful” rationalization plan.
The company was commenting on Moody’s Investor Services (Moody’s or MIS) withdrawing its rating on the 5.99 per cent USD1.75 billion senior unsecured notes issued by 1MDB Energy Limited (Energy Notes).
Moody’s cited “business reasons” in its announcement on the withdrawal.
1MDB noted the withdrawal was undertaken without a downgrade in Moody’s “Aa2” credit rating for the Energy Notes. Also, said the statement, “the Energy Notes continue to benefit from a ‘AA’ rating from Standard and Poor’s”.
According to 1MDB, Moody’s “Aa2″ credit-rating for the Energy notes remained valid up to the point of rating withdrawal, i.e. the withdrawal was done with no downgrade of the credit rating for the Energy Notes.
The Moody’s “Policy for Withdrawal of Credit Ratings” (document reference SP 13418, effective date 14 December 2015), according to the Notes, states in item II(6):
“Business Reasons: under certain circumstances, MIS will withdraw a Credit Rating for a Rated Entity or an obligation for reasons unrelated to the situations identified above.”
When MIS indicates that a Credit Rating was withdrawn for “business reasons,” this refers to MIS’s business reasons, not the business reasons of the Rated Entity or obligor, 1MDB said.
MIS’s business reasons, in short, generally do not reflect any concerns about the Rated Entity’s creditworthiness or the quality of its management.
1MDB’s statement went on to say that MIS’s decision to withdraw a rating “under these circumstances” will attempt to balance the informational benefit to market participants. This refers to maintaining a Credit Rating “against the resources required” to maintain and monitor that Credit Rating or other business considerations.
