RAM Ratings has reaffirmed the AA1(s)/Stable rating of UEM Group Berhad’s (UEM) RM7 billion Sukuk Wakalah Programme, issued through its wholly owned funding vehicle UEM Olive Capital Berhad.
The rating reflects UEM’s strong credit profile as the ultimate obligor, given its purchase undertaking to the sukuk trustee on behalf of sukuk holders. It also factors in a “high likelihood of extraordinary support” from parent company Khazanah Nasional Berhad, consistent with RAM’s methodology for rating government-linked entities.
RAM noted that UEM remains integral to Khazanah’s role as Malaysia’s infrastructure investment arm, holding key strategic assets across highways, airports, property, and green energy. This includes UEM Lestra Berhad, its flagship subsidiary leading Khazanah’s green business initiatives under Malaysia’s National Energy Transition Roadmap (NETR).
UEM also owns stakes in PLUS Malaysia Berhad and Malaysia Airports Holdings Berhad (MAHB) — the latter transferred to UEM in 2024 as part of Khazanah’s strategy to consolidate infrastructure assets. In 2025, Khazanah further injected funds to complete MAHB’s privatisation and later capitalised RM2.2 billion in outstanding balances into redeemable convertible preference shares (RCPS).
RAM said it has proportionately consolidated MAHB’s debts and cash flows in its assessment to reflect UEM’s joint control of the airport operator, while treating the RCPS as an equity-like instrument when adjusting financial metrics.
“UEM’s standalone credit profile remains supported by its diversified business portfolio and leading market positions in property, cement, asset management, and airport operations,” RAM said.
While UEM’s core dividend income from PLUS is restricted until 2038 following toll restructuring, future cash flows are expected from its cement, property, and MAHB divisions. The Group is also expected to raise RM1.1 billion to RM1.5 billion in new borrowings through 2026, primarily to scale up UEM Lestra’s green investment platform.
RAM cautioned, however, that these expansion plans carry execution risks and uncertainties over investment returns.
UEM’s cashflow debt coverage remains weak at below 0.15 times at both company and group levels. Nonetheless, company-level gearing is projected to stay strong at around 0.3 times, while group-level adjusted gearing is expected to moderate to 0.55 times post-RCPS conversion (from 0.70 times as of June 2025).
The agency said UEM’s healthy balance sheet, diversified banking access, and strong capital markets track record continue to provide financial flexibility and support its credit strength.
