MARC Ratings has assigned a preliminary rating of MARC-1IS to Khazanah Nasional Berhad’s (Khazanah) proposed Islamic Commercial Papers (ICP) Programme of up to RM1.0 billion in nominal value. The rating is based on the rating agency’s assessment of Khazanah’s corporate credit rating at AAA/Stable.
The rating reflects Khazanah’s status as a government-related entity established to own and manage the Malaysian government’s commercial assets and undertake investments in strategic sectors. The rating is aligned with the government’s rating of AAA/Stable and the rating agency’s view of the government’s very high propensity to provide support to Khazanah should the need arise. This view is based on Khazanah’s key role as a sovereign wealth fund, the composition of its board of directors, and the sizeable investments it holds in key sectors of the Malaysian economy, including in companies that have national interests.
Established in 1993, Khazanah has diverse controlling and non-controlling business interests in air transportation, property development, highway toll management, banking, utilities, healthcare, and telecommunications, among others. Key corporates in its portfolio include UEM Group Berhad, Malaysia Aviation Group Berhad, CIMB Group Holdings Berhad, Tenaga Nasional Berhad, IHH Healthcare Berhad, Axiata Group Berhad and Telekom Malaysia Berhad.
MARC Ratings notes that Khazanah primarily tracks and presents its key performance indicators using fund management metrics. As at December 2024, the Realisable Asset Value (RAV) and Net Asset Value of its portfolio stood at RM151 billion and RM104 billion. Over the past five years, Khazanah’s portfolio RAV has been sufficient to cover 2.7x to 3.2x the full amount of its outstanding debt. Moreover, its portfolio is geographically weighted towards Malaysia and mainly in relatively more liquid public market instruments.
Khazanah’s annual income has generally been sufficient to cover profit/interest payments, of around RM2.2 billion p.a. as reflected by its OPBITDA-to-interest coverage, which stood at 2.47x in 2024. MARC Ratings considers Khazanah to have very strong accessibility to capital markets and banks, which will enable the refinancing of maturing debt and sukuk issuances.