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RAM Ratings affirms AA3 rating of Tanjung Bin Energy’s RM4.5 bil sukuk
Published on 21 Sep 2026.
RAM Ratings has affirmed the AA3/Stable rating of Tanjung Bin Energy Sdn Bhd’s (TBE or the Company) RM4.5 bil Islamic MTN Programme (2021/2041) (the Sukuk).
The affirmation is premised on our expectation that TBE’s finance service coverage ratio (FSCR) will remain aligned with the rating, supported by standby letters of credit from its sole shareholder, Malakoff Corporation Berhad, and management’s commitment to deploy mitigating measures when required to preserve rating-aligned debt service coverages.
TBE’s 1,000 MW ultra-supercritical coal-fired power plant in Tanjung Bin, Johor (the Plant) resumed operations on 28 January 2026 following repairs to damage caused by an October 2025 fire. Stable operations since recommissioning and the timely receipt of insurance proceeds resulted in cash and bank balances of RM253.32 mil as at end-June 2026. The Company’s FSCR, including cash balances, was 1.65 times on the May 2026 repayment date, exceeding our expectation of 1.50 times.
Going forward, cash retention is expected to come under pressure from higher availability target payments linked to the Plant’s volatile performance over the past five years, increased insurance premiums after the fire incident, and repayments of previously deferred operations and maintenance (O&M) costs to the O&M company.
Our stressed case projections indicate that TBE will maintain minimum and average annual FSCRs of 1.50 times and 2.12 times, respectively, over the Sukuk’s remaining tenure. This assumes management retains the flexibility to defer or reschedule selected payments when needed. Cash preservation remains crucial given the transaction’s sensitivity to further material adverse variations.
TBE’s reliance on a single generating unit for its income underscores the importance of its operational reliability. While there is a significant bullet payment due in 2032, refinancing risk is moderated by Malakoff Corporation Berhad’s demonstrated support, the remaining tenure of the Company’s power purchase agreement, and Sukuk’s requirement for liquidity facilities as well as the provision for the sponsor to secure contingent financing ahead of the 2032 repayment date. Like other coal independent power producers, TBE is also subject to regulatory developments, coal price volatility and higher insurance premiums amid the broader transition away from coal-fired generation.
Analytical contacts
Liew Kar Ling
(603) 2708 8216
karling@ram.com.my
Neo Xue Wei, CFA
(603) 2708 8241
xuewei@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, in as much 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
