RAM Ratings reaffirms MAHB’s sukuk ratings

Published on 27 Oct 2022.

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RAM Ratings has reaffirmed the ratings of Malaysia Airports Holdings Berhad’s (MAHB or the Group) sukuk facilities (Table 1). 

The reaffirmation is premised on our view that MAHB’s financial profile will continue to improve on the back of a rebound in passenger traffic. Over the period in review, MAHB’s performance and the pace of its recovery came in within expectations. Overall passenger volumes at its Malaysian airports are largely on track towards meeting our estimates. Meanwhile, outperformance in international passenger volumes at its Turkish airport offset the weaker-than-expected domestic segment. The ratings further consider the high likelihood of extraordinary support from the Government of Malaysia. 

MAHB is the sole operator of all 39 government-owned airports in Malaysia – a key rating strength. Its operation of Sabiha Gokcen International Airport (SGIA) in Turkiye provides some diversification, with the airport having performed fairly well during the pandemic. Still-favourable long-term industry prospects and MAHB’s prudent financial management are also positive factors.

MAHB has seen a marked pick-up in passenger movements at its domestic airports since 4Q 2021 following the easing of travel restrictions and border reopenings. Passenger volumes surged more than seven-fold to 29.91 mil in 8M 2022 (43% of pre-pandemic level; 2021: -58%). Looking ahead, passenger traffic is anticipated to gradually recover as healthy travel demand amid continued (albeit slower) economic growth in Asia Pacific outweighs high ticket prices and the weaker global economic outlook. 

SGIA continued to recover as travel curbs were relaxed. Traveller numbers rose 32% in 8M 2022 (84% of pre-crisis level; 2021: +47%), boosted by the summer holiday season. We expect passenger traffic to continue its uptrend, underpinned by strong demand especially from foreign travellers encouraged by the weak lira. 

The Group’s core pre-tax loss narrowed by about 18% last year as SGIA’s stronger performance and continued cost reduction efforts offset losses at domestic airports. In 1H FY Dec 2022, MAHB’s operating profit before depreciation, interest and tax (OPBDIT) turned positive while its pre-tax loss was substantially smaller. We expect OPBDIT to amount to RM800 mil-RM900 mil this year, rapidly improving in the next two years to reach near pre-crisis levels in FY Dec 2024 with expected sustained recovery in passenger traffic.

MAHB’s larger debt load of RM6.5 bil as at end-June 2022 (+25% y-o-y) will be used to repay RM1.5 bil of maturing sukuk. Net gearing increased to 0.54 times as at the same date (end-December 2020: 0.47 times). Funds from operations (FFO) and operating cashflows were positive in FY Dec 2021 and 1H FY Dec 2022, translating into FFO debt coverage (FFODC) of 0.03 times and 0.12 times (annualised), respectively. We expect debts to markedly ease after the sukuk repayment in view of manageable capital expenditure. Gearing and net gearing are projected to be a respective 0.8 times and 0.5 times. FFODC should recover to 0.15 times-0.20 times over the course of this year and next, edging closer to 0.30 times in FY Dec 2024.

The finalisation of MAHB’s new operating agreements (OAs) has been further delayed, although we understand that discussions with the government are nearing conclusion. While the hold-up is credit negative, MAHB’s rights and benefits under the existing OAs remain intact.

Table 1: MAHB’s ratings


Rating action

 Malaysia Airports Holdings Berhad


 RM5 bil Senior Sukuk/Perpetual Subordinated Sukuk Programme

  • RM5 bil Senior Sukuk



  • RM5 bil Perpetual Subordinated Sukuk




RM2.5 bil Senior Sukuk Programme (2013/2033)



RM2.5 bil Perpetual Subordinated Sukuk Programme (2014/2114)



 Malaysia Airports Capital Berhad


 RM3.1 bil Islamic Medium Term Notes Programme (2010/2025)



  1. The ratings of MAHB’s RM2.5 bil and RM5.0 bil Senior Sukuk Programmes reflect the Group’s credit profile. The instrument ranks pari passu with the Group’s senior unsecured borrowings.
  2. MAHB’s RM2.5 bil and RM5.0 bil Perpetual Subordinated Sukuk Programmes are rated two notches below its long-term corporate credit rating to reflect the risk of deferrable profit distributions and the deeply subordinated rights of the sukukholders to claims in the event of insolvency.
  3. The rating of MAHB’s RM3.1 bil Islamic MTN Programme (under Malaysia Airports Capital Berhad) is linked to the Group’s senior rating as the Islamic structure of the facility provides recourse to MAHB by virtue of its obligations under a purchase undertaking.


Analytical contacts
Karin Koh, CFA 
(603) 3385 2508

Thong Mun Wai 
(603) 3385 2522


The credit rating is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment on the security’s market price or its suitability for a particular investor, nor does it involve any audit by RAM Ratings. The credit rating also does not reflect the legality and enforceability of financial obligations.

RAM Ratings receives compensation for its rating services, normally paid by the issuers of such securities or the rated entity, and sometimes third parties participating in marketing the securities, insurers, guarantors, other obligors, underwriters, etc. The receipt of this compensation has no influence on RAM Ratings’ credit opinions or other analytical processes. In all instances, RAM Ratings is committed to preserving the objectivity, integrity and independence of its ratings. Rating fees are communicated to clients prior to the issuance of rating opinions. While RAM Ratings reserves the right to disseminate the ratings, it receives no payment for doing so, except for subscriptions to its publications.

Similarly, the disclaimers above also apply to RAM Ratings’ credit-related analyses and commentaries, where relevant.

Published by RAM Rating Services Berhad
© Copyright 2022 by RAM Rating Services Berhad

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