KUALA LUMPUR (July 12): MARC Ratings Bhd has affirmed its A+IS rating on Yinson Holdings Bhd’s (KL:YINSON) RM1 billion Islamic Medium Term Notes Programme (Senior Sukuk), and its A-IS rating on the group’s RM1 billion Subordinated Perpetual Islamic Notes Programme (Perpetual Sukuk), with a stable outlook. 

MARC said the affirmation of its ratings on Yinson’s sukuk reflects the group’s healthy profit margins and long-term earnings visibility from sizeable charter contracts for providing floating, production, storage and offloading (FPSO) vessels.  

“The rating also factors in Yinson’s established track record in the FPSO industry, which has enabled them to build a sizeable portfolio,” MARC said in a statement on Thursday. 

Notwithstanding Yinson’s strengths, MARC highlighted that key moderating factors of the ratings include the weak-to-moderate risk profile of counterparties, and the capital-intensive nature of the FPSO business that has led to growing borrowings.  

The rating agency noted that Yinson’s total borrowings will increase to around RM22.8 billion in the financial year ending January 2025 (FY2025), from RM18 billion as at end-FY2024, which according to MARC, will mainly fund the remaining construction of FPSO Maria Quitéria and FPSO Agogo. 

Borrowings had also increased from earlier projections, MARC added, in part due to the weakening ringgit, as most of Yinson’s borrowings are denominated in US dollars.  

“MARC Ratings notes, however, that Yinson’s principally US dollar (USD)-denominated revenue provides a natural hedge for USD debt service, mitigating currency risk,” it said.  

At Friday’s market close, Yinson’s shares were up one sen, or 0.42%, at RM2.41, with a market capitalisation of RM7.68 billion.