KUALA LUMPUR: RAM Ratings has upgraded the rating for UEM Group Bhd's RM2.2 billion sukuk from AA2/Stable to AA1/Stable.
The sukuk was issued through funding vehicle United Growth Bhd.
RAM said this is in view of stronger government support and the high likelihood of extraordinary support which was previously moderately high from Khazanah Nasional Bhd.
The firm also assigned an AA1(s)/Stable rating to the proposed Islamic Medium-term notes programme of up to RM7.0 billion through another funding vehicle, which is UEM's wholly-owned UEM Olive Capital Bhd.
"RAM has changed our view in our assessment of UEM's role as a government-linked entity, and now deem it to be very important to Khazanah.
"The group is seen as more integral to support the government's shift to a high-value green economy as outlined by the National Energy Transition Roadmap (NETR).
"Khazanah, as a champion of an integrated Renewable Energy (RE) Zone under the NETR, has identified UEM as its green investment vehicle," it said.
UEM will be responsible for pulling in investment within the green sectors to deliver the fund's societal, strategic and financial mandates in propelling the country's decarbonisation agenda.
This is also to upskill local talent in the green sectors over the long term.
"Khazanah's ownership of its sustainable energy arm, Cenergi SEA Bhd (Cenergi), was recently consolidated under UEM's umbrella of companies.
"Cenergi's extensive related experience and capabilities as the biggest grid-connected palm oil mill effluent biogas provider under Malaysia's feed-in-tariff scheme, making it a valuable addition to the group," RAM said.
One of the 10 flagship projects under the NETR also includes the development of a 1 gigawatt solar photovoltaic (PV) plant and a RE industrial park.
This was done by UEM through the memorandum of understanding with several partners which will become an integral part of the RE zone.
"UEM's standalone credit profile is well supported by core businesses under UEM Edgenta Bhd and UEM Sunrise Bhd, notwithstanding its more moderate business strength following the restructuring of the group's toll subsidiary and periodic weakness in consolidated debt coverage levels," it said.
In its statement, UEM managing director Datuk Mohd Izani Ghani welcomed RAM's assessment and indicated that it reflects positively on the company's strategic trajectory.
"It is a testament to the comprehensive alignment between UEM Group and our parent company, Khazanah, as we drive future-focused initiatives to develop Malaysia's domestic renewable energy capabilities and accelerate the country's energy transition towards achieving the aspiration of net-zero emissions by 2050," he said.
