MARC Ratings has removed YNH Property Berhad’s (YNH) Islamic Medium-Term Notes Programme (Sukuk Wakalah) rating from MARCWatch Negative placement and concurrently downgraded the rating to BBIS. The rating had been on negative watch since January 18, 2024, precipitated by YNH’s weak financial position, delayed asset disposals and material issues concerning its key shareholder that have compounded the challenges the group has been facing to address its weakening credit profile.
Since the negative placement in January, the rating agency notes that YNH has not made any meaningful progress that would have alleviated concerns about its ability to meet its upcoming financial obligations. YNH has an outstanding RM323.0 million under the IMTN programme, of which the first tranche of RM153.0 million will mature on February 28, 2025. It is required to build up 50% of this amount through monthly payments of RM6.1 million into a reserve account from February 28, 2024, onwards. However, YNH has found it challenging to meet this financial commitment, periodically lapsing into technical defaults, underscoring its weak liquidity position. Cash and short-term deposits stood at about RM13 million while total group borrowings stood at RM1.2 billion as at March 31, 2024.
MARC Ratings’ rating action to downgrade YNH’s rating to BBIS upon removing it from negative watch reflects heightening concerns over the group’s business and financial prospects. The rating outlook is negative. While the visibility of progress billings from few ongoing property developments remains modest at this juncture, the rating agency understands from YNH that sales performance of its Solasta project is improving. Should this trend continue, coupled with an accelerated pace to conclude its asset disposal plans including the sale of the 5.1-acre land parcel in Desa Sri Hartamas and 163 Retail Park mall in Mont Kiara, YNH would be better placed to improve its financial position. The rating agency will continue to monitor developments in YNH to take appropriate rating action.