MARC Ratings has affirmed its A+IS and A-IS ratings on Yinson Holdings Berhad’s (YHB) RM1.0 billion Islamic Medium-Term Notes Programme (Senior Sukuk) and RM1.0 billion Subordinated Perpetual Islamic Notes Programme (Perpetual Sukuk). The two-notch rating differential between the Senior Sukuk and Perpetual Sukuk reflects MARC Ratings’ application of its notching approach to subordinated debt and hybrid securities. The outlook on both ratings is stable.
The affirmation of the senior rating reflects YHB group’s sizeable long-term floating production storage and offloading (FPSO), and floating storage and offloading (FSO) charter contracts, alongside its strong execution capabilities and solid operational track record marked by high technical uptime. Strong earnings visibility supports the rating, though it is tempered by the capital-intensive FPSO business and high construction-related borrowing.
During the review period, FPSO Maria Quitéria, FPSO Atlanta, and FPSO Agogo commenced operations in October 2024, December 2024, and July 2025, expanding the group’s fleet to nine operational FPSOs/FSOs and two FSOs under construction. Revenue for the financial year ended 31 January 2026 (FY2026) is expected to remain stable, with contributions from FPSO Maria Quitéria, FPSO Atlanta, and a proportionate share from FPSO Agogo offsetting the deconsolidation of FPSO Anna Nery. Full-year contributions from all three FPSOs are expected to drive stronger growth in FY2027. Financial guarantees by YHB and/or Yinson Production will be lifted upon commissioning, reducing the parent’s leverage, with the recourse debt-to-equity ratio projected to fall to 1.46x in FY2026 from 2.25x in FY2025.
To strengthen its balance sheet, wholly-owned subsidiary Yinson Production Offshore Holding Limited (YPOHL) is issuing USD1.0 billion of redeemable convertible preference shares (RCPS) in tranches to partially fund new FPSO projects currently under bidding. The first tranche of USD300 million was issued on 17 June 2025, with the remaining amount to be drawn over 18 months, to be completed by end-2026. With 50% equity credit assigned to the RCPS, recourse leverage is projected to remain below 1.5x over the next three years, despite borrowings increasing to RM21.4 billion in FY2026 (FY2025: RM17.6 billion), primarily due to final payments for FPSO Agogo and partial funding requirements for a new FPSO.
Holding company YHB relies on dividends from YPOHL to meet its financial and operational needs. In FY2026, YPOHL upstreamed USD200 million, then capped annual payouts at USD125 million subject to YPOHL paying cash dividends to RCPS holders based on an agreed ratio until the RCPS is converted or redeemed.
Base case projections indicate that YHB can meet obligations with expected dividends. Under stress, the group can cut discretionary spending (e.g., non-essential capex, share buybacks), if needed. Over the medium term, an Initial Public Offering (IPO) (targeted within three to five years) would convert RCPS to equity and lift dividend caps. If the IPO is delayed, alternatives such as refinancing, conversion to perpetual bond or partial asset sales are available.
As of end-June 2025, the FPSO order book remains strong at USD19.6 billion, with upside potential from new project wins over the next couple of years. Group revenue continues to grow, driven by a 23.7% y-o-y increase in recurring leasing income to RM3.5 billion in FY2025, mainly from FPSO Maria Quitéria and FPSO Atlanta. However, pre-tax profit declined 33.9% y-o-y due to lower construction profit post-completion of FPSO Maria Quitéria and FPSO Atlanta. Liquidity remains healthy, with a cash balance of RM2.4 billion as at the end of 1QFY2026.