[RAM] RAM Ratings affirms AA3 rating of Tanjung Bin Energy's RM4.5 bil sukuk

RAM Ratings has affirmed the AA₃/Stable rating of Tanjung Bin Energy Sdn Bhd’s (TBE or the Company) RM4.5 bil Islamic MTN Programme (2021/2041) (the Sukuk), reflecting confidence in the company’s financial resilience, supported by strong liquidity and ongoing shareholder support, despite the unexpected operational challenges caused by the recent fire incident.

The affirmation is based on our expectation that the Company’s finance service coverage ratio (FSCR) will remain supportive of the issue rating, backed by standby letters of credit from its sole shareholder, Malakoff Corporation Berhad (Malakoff).

On 2 October, a fire incident at TBE’s 1,000 MW ultra-supercritical coal-fired power plant in Tanjung Bin, Johor (the Plant) resulted in damage to the chimney and flue gas desulfurisation system. However, the Plant’s main operating components remain intact. Repairs are underway, with the team working on best effort to complete them by end of December 2025, where feasible. Management has implemented cost containment measures to mitigate revenue losses during the outage. Of the near-three months of downtime, one month coincides with a scheduled outage, during which TBE continues to receive available capacity payments (ACPs). 

Prior to the incident, the Plant exhibited strong operational performance, and TBE’s cash and bank balances were a healthy RM244.70 mil as at end-October 2025. Considering these factors, we anticipate minimum and average annual FSCRs (with cash balances) of 1.50 times and 1.65 times, respectively, for the Sukuk’s remaining tenure, taking into account repair costs, potential insurance compensation and a stress scenario of a slightly longer repair period than management’s expectations. 

While TBE’s financial performance at the company level remains constrained, cashflow generation is expected to sufficiently cover sukuk obligations provided there are no prolonged operational disruptions as the transaction’s capacity to absorb additional significant setbacks is limited. The Plant will enter a new contract year block in January 2026, which provides a reset of allowance for scheduled and unscheduled outages, allowing TBE to carry out further repairs without penalty, if approved, and still qualify for ACPs. 

The Company is exposed to regulatory and market risks typical for independent power producers, including coal price fluctuations and higher insurance premiums amid a broader shift away from coal-fired generation. TBE faces a significant repayment due in 2032 although Malakoff’s strong sector position and demonstrated commitment to the Company, as seen in past equity injections, help mitigate these risks. 


Analytical contacts
Liew Kar Ling
(603) 2708 8216
karling@ram.com.my

Chong Van Nee, CFA
(603) 2708 8210
vannee@ram.com.my

Media contact
Sakinah Arifin 
(603) 2708 8212
sakinah@ram.com.my