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RAM Ratings affirms Bakun Hydro’s sukuk at AAA/Stable
Published on 27 Nov 2025.
RAM Ratings has affirmed the AAA/Stable rating of Bakun Hydro Power Generation Sdn Bhd’s (Bakun Hydro or the Company) RM5.54 bil Sukuk Murabahah (2016/2031) (the Sukuk). The affirmation reflects the Company’s solid financial performance and support provided by the Government of Malaysia in the form of a strongly-worded irrevocable and unconditional letter of undertaking to ensure the Company’s finance service coverage ratio (FSCR) remains at a minimum of 2.0 times throughout the Sukuk’s tenure.
Operational performance at the Company’s 2,520 MW hydroelectric plant in Belaga, Sarawak (the Plant) remains sound. Net electricity output increased by 5% y-o-y in 2024 and 6% y-o-y in 1H 2025, driven by greater demand from related company Syarikat SESCO Berhad – Sarawak’s sole energy off-taker – and improved plant efficiency, as seen in lower outage hours. Bakun Hydro reported revenue of RM785.39 mil and pre-tax profit of RM304.18 mil in 1H FY Dec 2025, positioning it for another strong full year performance (FY Dec 2024: RM1.52 bil and RM555.13 mil, respectively).
The FSCR (with cash balances) as of the latest repayment date of 11 August 2025 stood at 2.94 times, surpassing our expectations of 2.58 times and kept Bakun Hydro’s liquidity profile strong. Cash and bank balances were robust at RM1.33 bil as at end-August 2025. The Company is anticipated to maintain superior minimum and average annual FSCRs (with cash balances) of 2.0 times and 4.65 times, respectively, over the remaining tenure of the Sukuk underpinned by healthy internal cash generation and accumulated cash reserves.
A potential credit risk arises under RAM’s sensitivity analysis (though not under management’s expectations) from the 2028 bullet repayment of Bakun Hydro’s unrated RM1.0 bil government-guaranteed sukuk. If not refinanced, and following a RM239.25 mil dividend payout in June 2025, a one-time government top-up of about RM270.0 mil may be required to maintain an FSCR of 2.0 times on the Sukuk’s principal repayment date in August 2029.
The Company’s reliance on a single asset exposes it to project-specific and force majeure risks, although these are mitigated by the Plant’s satisfactory track record. Commissioned in July 2014, the Bakun hydroelectric plant is Malaysia’s largest hydro-powered electricity producer, playing a key role in supporting the Sarawak grid and driving the Sarawak Government’s target of achieving 10 GW of renewable energy generation by 2030.
Analytical contacts
Liew Kar Ling
(603) 2708 8216
karling@ram.com.my
Chong Van Nee, CFA
(603) 2708 8210
vannee@ram.com.my
Media contact
Sakinah Arifin
(603) 2708 8212
sakinah@ram.com.my
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 2025 by RAM Rating Services Berhad
