[RAM] RAM Ratings upgrades PKNS's sukuk rating to AA1

RAM Ratings has upgraded Perbadanan Kemajuan Negeri Selangor’s (PKNS) perpetual RM3 bil Islamic Medium-Term Notes Programme (2021/-) to AA₁/Stable from AA₃/Stable. The short-term P1 rating of its RM1 bil Islamic Commercial Paper Programme (2021/2028) has been affirmed.

The upgrade follows from our positive reassessment of the ‘very high’ (previously ‘moderately high’) likelihood of extraordinary state support under RAM’s new Master Criteria for Government-Linked Entities, released in October 2024. PKNS is set to transition beyond its current housing development focus, expanding its role and contribution as a state agency. The Selangor Menteri Besar at a meeting with RAM in March 2025 affirmed the state government’s mandate for PKNS as a core state economic development agency undertaking key strategic initiatives for Selangor. The enhancement of PKNS’s mandate anchors the two-notch upgrade for the IMTN.

Strategic initiatives now undertaken by PKNS include healthcare services through Selgate Corporation Sdn Bhd, as well as the recently completed Pulau Indah power plant (PIPP) and currently being built waste-to-energy plants under Worldwide Holdings Berhad. These are key drivers of the state’s Rancangan Selangor Pertama (RS-1). Also to be spearheaded by PKNS on behalf of the State is the proposed construction of Carey Island Port – Malaysia’s third port and another major RS-1 project.

On a standalone basis, PKNS’s financial performance during the review period was within expectations. Adjusted funds from operations debt coverage, while still deemed low, improved slightly to 0.10 times in FY Dec 2023 and is likely to hover at this level in the near term until contributions from healthcare and energy operations gain pace post-initial phases. On balance, the Agency’s strong balance sheet will continue to provide flexibility to fund operational and capital expenditure needs. Adjusted gearing, which was a solid 0.33 times at end-June 2024, is anticipated to stay at around 0.4 times over the next two years.

Going forward, PKNS’s financial profile may improve materially, anchored by meaningful revenue and profit contributions from PIPP. Rating upside may be warranted if its new ventures are successfully implemented and contribute significantly to cashflows and balance sheet strength.


Analytical contacts
Hani Hamizah Nor Hashim
(603) 2708 8240
hani@ram.com.my

Thong Mun Wai 
(603) 2708 8255
munwai@ram.com.my

Media contact
Sakinah Arifin
(603) 2708 8212
sakinah@ram.com.my