S&P rates Penerbangan Malaysia bonds A-

Standard & Poor's said it assigned its A- long-term senior unsecured foreign currency debt rating to Penerbangan Malaysia Bhd.'s proposed guaranteed $1 billion bond.

The A- rating on the proposed notes reflects the direct, irrevocable and unconditional guarantee by the government of Malaysia.

The ratings on Malaysia balance its dynamic economy, strong external liquidity and public sector net external creditor position against general government deficits, relatively high general government net debt and substantial contingent liabilities, S&P said.

The stable outlook on Malaysia's ratings reflects S&P's expectation that the government will only modestly consolidate its finances. If the government loosens its fiscal stance to spur growth or the economy slows materially, Malaysia's credit standing could come under pressure. But Malaysia's credit standing could improve if stronger growth and efforts to rationalize spending result in lower-than-expected deficits and a reduction of debt, S&P said.

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