RAM Ratings affirms TNB’s AAA/Stable/P1 issue ratings

Published on 10 Jun 2024.

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RAM Ratings has affirmed the AAA/Stable/P1 ratings of Tenaga Nasional Berhad’s (TNB or the Group) sukuk programmes (see table).



The ratings reflect TNB’s strategic role as Malaysia’s national electric utility and its resilient operating and financial performance. In addition to a near monopoly over power transmission and distribution, TNB owns more than half of the total installed capacity in Peninsular Malaysia and currently serves as the sole offtaker of energy generated by independent power producers in the peninsula via Single Buyer – a ring-fenced department within the Group. Given its critical function in the Malaysian power sector and very strong relationship with the Government of Malaysia, TNB is deemed highly likely to receive extraordinary government support in the event of financial distress. 

In FY Dec 2023, the Group’s electricity sales remained sturdy, rising 4.9% y-o-y to drive its revenue (including ICPT recovery) to RM63.67 bil. Pre-tax profit however, dipped 36.9% to RM3.37 bil due to increased expenditure for repair and maintenance activities and higher administrative costs. Despite this, lower coal prices and a continued strong collection trend enabled TNB to reduce borrowings, strengthening its balance sheet and cash flow position. To date, the Group has fully recovered the total RM4.70 bil Imbalance Cost Pass-Through surcharge from the government for the July to December 2023 period. As at end-December 2023, total debt, including lease liabilities, eased to RM93.21 bil while operating cashflow debt coverage and gearing were an improved 0.35 times and 1.53 times, respectively (end-December 2022: RM97.94 bil, 0.10 times and 1.61 times). In 1Q FY Dec 2024, TNB’s pre-tax profit fell 6.6% y-o-y to RM1.03 bil primarily due to the foreign exchange translation losses, while its balance sheet and cash flow position were largely stable. 

Looking ahead, we expect energy demand to increase driven by Malaysia’s growing prominence as a preferred data centre destination. As a key enabler in the country’s National Energy Transition Roadmap initiatives, TNB spearheads 3,000 MW of flagship projects and would require investments in grid modernisation and upgrades to integrate large-scale renewable energy (RE) sources. The Group aims to have 8,300 MW of RE installed capacity by 2025 (FY Dec 2023: 4,302 MW). While planned capital expenditure (capex) is expected to be substantial going forward, the impact could be moderated by additional regulated earnings from higher allowable capex for its regulatory asset base, an exercise that is to be concluded in Regulatory Period 4, keeping the Group’s credit metrics intact. TNB may also see earnings upside from wheeling charges of cross-border electricity exports and third-party access once the framework is finalised. 


Analytical contacts
Liew Kar Ling
(603) 3385 2586

Chong Van Nee, CFA
(603) 3385 2482

Media contact
Sakinah Arifin
(603) 3385 2500


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 2024 by RAM Rating Services Berhad

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