RAM Ratings reaffirms AA2 rating of UEM’s sukuk

KUALA LUMPUR: RAM Ratings has reaffirmed the AA2/stable rating of UEM Group Bhd’s Islamic Medium Term Notes Programme of up to RM2.2 billion (2012/2042), issued through funding vehicle, United Growth Bhd.

In a statement yesterday, the rating agency said the reaffirmation of the rating takes into account the group’s strong business diversity and sturdy position of key subsidiaries.

“UEM has an important role by virtue of its stake in strategic local tolled roads and ownership of large tracts of land in Iskandar Puteri, a component of the government’s economic corridor, Iskandar Malaysia.

“Additionally, the group has a very strong relationship with its parent, Khazanah Nasional Bhd, the government’s investmentholding arm,” it said.

RAM said the likelihood of government support for the group in times of need is viewed as moderately high, as defined under its methodology for rating government-linked entities.

The rating also reflects UEM’s diversified business profile, with core segments comprising expressways, engineering and construction, township and property development, and asset and facility management.

“Stable earnings from its expressways segment has cushioned the construction segment’s losses and poorer property earnings in fiscal 2015, and will continue to provide a buffer against cyclical challenges,” RAM said. — Bernama