RAM Ratings upgrades Golden Agri’s issue rating to AA2(s)

Published on 10 Nov 2023.

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RAM Ratings has upgraded the rating of Golden Assets International Finance Limited’s (Golden Assets) RM5 bil Islamic Medium Term Notes Programme (2012/2027) to AA2(s) from AA3(s) and revised the positive outlook on the rating to stable. Golden Assets is a funding conduit of Indonesia-based plantation company, Golden Agri-Resources Ltd (GAR or the Group). 

The upgrade is supported by GAR’s strong business position as the world’s second largest planter and its high degree of vertical integration as well as the Group’s ability to maintain solid credit metrics commensurate with an AA2 rating. 

As at end-June 2023, GAR’s gearing ratio (adjusted for readily marketable inventories and cash pledged for repayment of borrowings) was an improved 0.41 times (end-June 2022: 0.52 times) after debts were pared down. Boosted by lofty crude palm oil (CPO) prices, the Group’s adjusted funds from operations debt cover has been very strong in the past two years at 0.39 times and 0.76 times, respectively, in FY Dec 2021 and FY Dec 2022. Healthy cash flows from still high CPO prices, coupled with moderate capital expenditure and investment sums, should allow for further deleveraging, sustaining debt coverage at above 0.30 times in the next two years. 

GAR’s operating profit before depreciation, interest and tax jumped 69.4% to a record high of USD1.9 bil in FY Dec 2022 (FY Dec 2021: USD1.1 bil), outperforming our expectations owing to stable upstream (+3%) and stellar downstream (+135%) earnings. Like other planters, GAR reported y-o-y weaker results in 1H FY Dec 2023 as the price of CPO eased from a peak. Diminished fresh fruit bunch production (-7%) due to replanting and a slightly lower profit contribution from the downstream segment (-10%) – albeit better than peers’ – are also responsible for the weaker showing. In the near term, reduced cost pressure from falling fertiliser prices should improve GAR’s earnings. Higher productivity following ongoing replanting would also lower unit costs in the longer term. 

The issue rating reflects GAR’s credit risks in view of the Group’s irrevocable and unconditional undertaking to the Trustee, for the benefit of sukukholders, to fulfil its obligations to Golden Assets to ensure principal and profit payments or any amount falling due under the sukuk programme are met.


Analytical contacts
Wong Ee Loo
(603) 3385 2521

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 2023 by RAM Rating Services Berhad

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