Debt crunch unlikely – but rising rates not the only problem


KUALA LUMPUR (July 23): While Malaysian households, with a debt-to-GDP ratio of 89% at the end of last year, are concerned about rising interest rates, Malaysian businesses are also heavily indebted.

How are companies listed in Bursa Malaysia coping with emerging from the pandemic period?

The edge dives into the numbers to examine the balance sheets of publicly traded companies, some of which have adapted during the previous downturn while continuing to provide returns to shareholders.

This includes the components of a company’s balance sheet, including the percentage of fixed rate bonds and borrowings they are adopting, to see how sensitive they are over that period.

The edge also takes a closer look at what has been a period of generous dividend payouts in 2019-21 for listed companies where government-linked funds hold substantial stakes.

While some may breathe a sigh of relief with rate expectations gradually rising and normalizing over the medium term, other concerns loom over tight cash flow and rising working capital needs, as that the business environment continues to be impacted by supply chain disruptions, rising costs and labor shortages.

There’s also another party that gets the end of the stick during a period of rising rates – bondholders – as marker prices fall in search of better yields, at least in the short term.

Want to know more about the state of listed Malaysian companies emerging from the pandemic into the higher interest rate regime?

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