[RAM] RAM Ratings affirms UEM's sukuk rating at AA1(s)/Stable

RAM Ratings has affirmed the AA₁(s)/Stable rating of UEM Group Berhad’s (UEM or the Group) RM7 bil Sukuk Wakalah Programme, issued through wholly owned funding vehicle, UEM Olive Capital Berhad. The issue rating reflects UEM’s credit profile as the ultimate obligor given its purchase undertaking to the sukuk trustee for the benefit of the sukuk holders. 

The rating enjoys an uplift from UEM’s standalone credit profile, reflecting our expectation that UEM will continue to enjoy a ‘high’ likelihood of extraordinary support from its parent, Khazanah Nasional Berhad (Khazanah), under RAM’s criteria on rating government-linked entities, and considers UEM’s integral role as Khazanah’s infrastructure arm. This includes UEM Lestra Berhad (UEM Lestra), a wholly owned subsidiary of UEM, as its flagship vehicle to drive green businesses in supporting Malaysia’s decarbonisation agenda under the National Energy Transition Roadmap. UEM also holds nationally strategic assets in highways and airport infrastructure by way of its equity interests in PLUS Malaysia Berhad and Malaysia Airport Holdings Berhad (MAHB), the latter which was transferred to UEM in 2024. 

In a move to strengthen UEM’s role as Khazanah’s infrastructure arm, Khazanah transferred its stake in MAHB to UEM (via its subsidiary Pantai Panorama Sdn Bhd) in 2024, and later injected funds to complete MAHB’s privatisation offer in February 2025. The RM2.2 bil owed to Khazanah arising from these transactions was subsequently capitalised as redeemable convertible preference shares (RCPS) in July 2025. In assessing the Group’s credit profile, we proportionately consolidated MAHB’s debts and cash flows to reflect UEM’s joint control over MAHB. We also considered the equity-like nature of the RCPS in our analytical adjustments to the Group’s financial metrics.

UEM’s standalone credit profile remains anchored by its diversified business profile and the leading market positions of its operating entities in the property, cement, asset & facility management and airport operation sectors. With dividends from Projek Lebuhraya Usahasama Berhad (PLUS) restricted until 2038 post-toll restructuring, core dividend streams are likely driven by normalised cement and property division performance, in addition to those from MAHB. In the near term, the Group is expected to raise an additional RM1.1 bil-1.5 bil of borrowings through 2026, mainly to help scale UEM Lestra’s green investment platform. As part of its strategic focus on infrastructure investments, management is also pursuing growth opportunities in this sector. These initiatives involve execution risks and some uncertainty around the realisation of returns from new investments.

UEM’s cashflow debt coverage levels remain weak standing at less than 0.15 times at both the company and group levels. That said, we envisage company-level gearing ratio to remain strong at around 0.3 times, while group-level adjusted gearing is expected to come in at 0.55 times after the RCPS conversion (end-June 2025: 0.70 times, after including UEM’s proportionate share of debt from MAHB), providing some headroom for future leveraging. Complementing its healthy balance sheet, UEM also benefits from diversified banking access and a proven track record in tapping capital markets. 


Analytical contacts
Amy Lo 
(603) 2708 8289
amy@ram.com.my

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

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