Briefing On Establishment

Danajamin Nasional Berhad

Briefing on Establishment

15 May 2009

Introduction

• YAB Perdana Menteri announced RM15b FGI on 10th March 2009

• YAB Perdana Menteri today announced the establishment of Danajamin Nasional Berhad, Malaysia’s first FGI

• Initial paid-up capital of RM1 billion, wholly owned by Government

• Licensed insurance company under Insurance Act 1996, regulated & supervised by BNM

• Rated AAA by both RAM & MARC

• Underwriting capacity of up to RM15 billion

2Confidential

Board of Directors

Dato’ Sri Abdul Hamidy Abdul Hafiz (Chairman)

Dato’ Albert Yeoh Beow Tit

Dato’ Mohammed Hussein

Dato’ Mohd Hanif bin Sher Mohamed

Encik George Ratilal

Encik Philip Tan Puay Koon

Encik Nik Mohd Hasyudeen Yusoff

Encik Abdul Kadir Md Kassim

3Confidential

What is a Financial Guarantee Insurer?

• Provides insurance (“wrap”) against default for holders of private debt and Islamic securities

• Wrap provided in exchange of insurance premium

• Hybrid of bank lender and bond investor

– Long tenors and market based pricing ala bonds

– Close monitoring and supervision ala bank

4Confidential

Why a Financial Guarantee Insurer?

• Increasing risk aversion since early 2000s

5Confidential

0%

25%

50%

75%

100%

2001 2002 2003 2004 2005 2006 2007

AAA / AA / P1 A / P2 BBB / P3 BB and below / NP

Business Model

6Confidential

Danajamin

CompaniesInvestors

Danajamin makes payments to investors in the event issuers default

on their payment obligations

Danajamin provides a guarantee facility to issuers to enable the issuance of long term PDS/IS – issuer pays

premiums for guarantee provided

Companies issue guaranteed PDS/IS to the investors in exchange for bond proceeds –make timely payments on debt obligations

1

2

3

Principal Underwriting Criteria

• Malaysian company; Malaysian utilisation of proceeds

• Standalone investment grade = pre-requisite

• Subject to independent credit evaluation by Danajamin

• Risk-based premium pricing

– Lower premiums for higher credit ratings, and vice versa

– Competitive against prevailing credit spreads

• Subject to single & aggregate risk limits

• Preference given to

– New issues for new investments

– Longer maturities

– Strong track record of corporate governance and risk management

7Confidential

Prudential Regulations

• Single risk limits

1. Asset-backed obligations: 10%

2. Real estate (non-ABS): 10% (net of 50% real estate value)

3. Infrastructure (gov’t): 100%

4. Infrastructure (non-gov’t): 75%

5. Bank obligations: 25%

6. Others (secured): 25%

7. Others (unsecured): 15%

• The above are regulatory defined limits. Danajamin reserves the right to set internal limits for risk management purposes

8Confidential

% of qualified capital

Benefits

• Facilitates availability of long-term capital for deserving businesses at a fair cost

• Mitigate some of the prevailing market dislocations

• Introduce a new, well-capitalised risk-taker to counter-balance risk-aversion

• Re-develop a market for deserving lower investment grade credits

• Stimulate the economy via improving the flow of credit to businesses

9Confidential

• Application Process

• An application kit will be issued in due course

Application Process

10Confidential

Appoint Lead

Manager/Adviser

Rating process

begins

Engage Danajamin

Due

Diligence by

all parties

Indicative Rating

Provided

Conditional

Danajamin

Offer Provided

SC application

Thank You

Contact Information

Danajamin Nasional Berhad

Level 30, Gardens North Tower

Mid Valley City

Lingkaran Syed Putra

Kuala Lumpur

Tel : 03-20359669

Fax: 03-20359767

[email protected]

www.danajamin.com

Confidential 11