MARC RATINGS ASSIGNS PRELIMINARY RATINGS TO S P SETIA'S PROPOSED SUKUK PROGRAMMES

MARC Ratings has assigned preliminary ratings to S P Setia Berhad's proposed sukuk programmes as follows:

- RM3.5 billion Islamic Medium-Term Notes (IMTN)/ Perpetual Sukuk Programme with a sublimit of RM1.5 billion on the Perpetual Sukuk at AAIS /A+IS. The ratings outlook is stable.
- RM500.0 million Islamic Commercial Papers Programme at MARC-1IS.

MARC Ratings maintains its rating on S P Setia's existing RM3.0 billion IMTN Programme, which was affirmed on July 5, 2024, at AAIS/Stable. The existing IMTN programme has been fully drawn down. (The full credit analysis report was published on July 12, 2024.)

Proceeds under the new programmes will mainly be used to fund initial costs for new green projects as well as working capital requirements, and support future expansion plans. MARC Ratings views that there has been no material change in S P Setia's credit profile since the last rating review in July 2024. The rating on the senior-ranked IMTN programme continues to be driven by S P Setia's established domestic market position in township development, strong sales track record with sizeable unbilled sales, and a considerable landbank that provides earnings visibility over the medium term. The rating also incorporates a one-notch uplift on MARC Ratings' assumption of support extended by parent Permodalan Nasional Berhad, if needed.

Meanwhile, the two-notch rating differential between the perpetual sukuk and IMTNs reflects the subordination of the former to the senior unsecured obligations of the latter, in line with MARC Ratings' methodology. Based on the perpetual sukuk's characteristics, the rating agency would accord it with 50% equity credit.

During 2024, S P Setia recorded revenue of RM5.3 billion, up by 21% y-o-y, driven by land sales mainly in the southern and central regions. Accordingly, pre-tax profit rose to RM1.1 billion (2023: RM655.7 million) despite the i