Malaysian Rating Corporation Berhad

08/09/2019 | Press release | Distributed by Public on 08/08/2019 23:12

No rating impact from Tenaga Nasional Berhad's proposed internal reorganisation

Posted Date: August 09, 2019

MARC is issuing this update on Tenaga Nasional Berhad (TNB) following the group's recent announcement to undertake a proposed internal corporate reorganisation in line with its strategic transformation plan. Among the key changes under the proposed reorganisation are the formation of two new wholly-owned subsidiaries, GenCo and RetailCo, into which TNB will transfer its domestic power generation and electricity retail businesses. The national grid operations and electricity distribution will be maintained by TNB.

MARC views the proposed reorganisation will have no material impact on TNB's overall credit profile. TNB will maintain its monopoly status in electricity transmission and distribution in Peninsula Malaysia and Sabah and have significant electricity generation capacity through its subsidiaries. MARC also notes that post-reorganisation TNB would own a significant portion of group's regulated assets and generate the majority of group profitability. TNB will maintain its single buyer status.

MARC continues to impute a high likelihood of government support due mainly to TNB's role as principal energy provider in the country and the government's indirect majority ownership in the company. These factors support a two-notch rating uplift from TNB's standalone corporate credit rating to AAA while its RM2.0 billion Al-Bai' Bithaman Ajil Bonds is rated AAAIS. The list of other TNB-related entities rated by MARC is appended below. The outlook on all ratings is stable.

Kapar Energy Ventures Sdn Bhd RM2.0 billion Sukuk Ijarah AA+IS
TNB Western Energy Berhad RM4.0 billion Sukuk AAAIS
TNB Northern Energy Berhad RM1.535 billion Sukuk AAAIS
Southern Power Generation Sdn Bhd RM4.0 billion Sukuk Wakalah AA-IS
Jimah East Power Sdn Bhd RM8.98 billion Sukuk Murabahah AA-IS

Lim Chi Ching, +603-2717 2963/ [email protected];
Sharidan Salleh, +603-2717 2954/ [email protected]