MARC RATINGS ASSIGNS PRELIMINARY RATING OF AA+IS TO TNB KUALA MUDA SOLAR'S PROPOSED ASEAN GREEN SRI SUKUK WAKALAH 

MARC Ratings has assigned a preliminary rating of AA+IS to TNB Kuala Muda Solar Sdn Bhd's (TKMS) proposed ASEAN Green Sustainable and Responsible Investment (SRI) Sukuk Wakalah of up to RM1.05 billion with a stable outlook.

TKMS is a special-purpose vehicle established to develop, own and operate a 500MWac solar photovoltaic plant in Bukit Selambau, Kedah. The company is wholly owned by TNB Renewables Sdn Bhd (TRe, AAA/Stable), which, in turn, is wholly owned by Tenaga Nasional Berhad (TNB, AAA/Stable). Proceeds from the sukuk issuance will fund 80% of the RM1.3 billion project cost, with the remainder financed through ordinary shares (10%) and redeemable preference shares (90%) to be issued to TRe. 

The rating incorporates a two-notch uplift based on expected parental support from TNB, reflecting the project's strategic importance and its close operational and financial integration with the ultimate parent. On a standalone basis, TKMS' credit profile is supported by projected robust cash flow coverage under a 21-year power purchase agreement (PPA) with TNB. It also benefits from TRe's strong track record in large-scale solar development, including three operational plants ? one in Sepang, Selangor (50MW) and two in Bukit Selambau, Kedah (30MW and 50MW). These strengths are tempered by construction risk, as well as solar resource variability and performance uncertainty. 

The project is TNB Group's largest renewable energy venture to date, underscoring its strategic importance. The Group's commitment is demonstrated by parent TRe's undertaking to fund construction-phase liquidity shortfalls of up to 10% of total project costs as well as meet TKMS' finance service reserve account and maintenance reserve account requirements. TRe's capacity to provide support is strengthened by the financial standing and backing of TNB, including funding
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