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RAM Ratings affirms AAA(s) sukuk ratings of Khazanah’s funding conduits
Published on 26 Aug 2026.
RAM Ratings has affirmed the AAA(s)/Stable ratings of Islamic securities programmes established by funding conduits of Khazanah Nasional Berhad, reflecting Khazanah’s critical public policy role as Malaysia’s sovereign wealth fund and its close linkage with the Federal Government. The suffix “(s)” to its issue ratings denotes rating enhancement arising from Khazanah’s contractual undertaking to cover any shortfall in profit distributions and capital repayments under the programmes.
The rating action is anchored on Khazanah’s instrumental function in preserving and enhancing national assets, catalysing strategic investments aligned to national economic development policies, and supporting long term socio-economic objectives. These institutional linkages underpin our expectations of extraordinary support from the government under a stress scenario, resulting in credit strength that remains closely aligned with that of the sovereign.
Khazanah's investment portfolio realisable asset value (RAV) grew to RM156 bil as at end-2025 from RM151 bil a year earlier. The portfolio is diversified across more than 10 private and public market sectors and multiple geographies, providing a degree of resilience against sector specific volatility. Investment performance remains broadly stable, with the portfolio generating a seven-year rolling return of 6.1% since 2019 (six-year rolling return of 6.2%), supported by local and global public markets. While investments are predominantly Malaysia-focused, limited disclosure on private market investments constrains visibility into asset level risks and downside sensitivities.
Khazanah maintains strong financial flexibility through substantial funding capacity under its unutilised debt programmes and continued access to domestic and international capital markets. Despite higher total extended company debt of RM50.7 bil as at end-December 2025, RAV debt coverage was adequate at 3.1 times. Foreign currency borrowings, accounting for 40% of total debt, are largely matched by earnings from overseas investments, mitigating foreign exchange risk. Dividend income-to-interest coverage improved to 1.8 times in 2025 and is expected to remain stable, supported by prudent capital management and stable portfolio performance.
Analytical contacts
Joel Thum
(603) 2708 8232
joel@ram.com.my
Tan Han Nee
(603) 2708 8322
hannee@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 2026 by RAM Rating Services Berhad
