RAM Ratings has affirmed the AAA/Stable/P1 ratings of Tenaga Nasional Berhad's (TNB or the Group) sukuk programmes (see table) in view of its strong credit profile, underpinned by its role as Malaysia's largest electric utility. 

               Instruments                                                      Ratings
i) RM5 bil Islamic MTN Programme (2017/2067)                                   AAA/Stable
ii) RM10 bil Islamic MTN Programme (2020/2070)                                  AAA/Stable
iii) RM2 bil Islamic Commercial Papers Programme (2021/2028)                     P1
iv) RM10 bil Islamic MTN Programme (2026/2076) AAA/Stable                  AAA/Stable

The ratings reflect TNB's dominant position in Peninsular Malaysia, where it maintains a near monopoly in transmission and distribution and owns more than half of installed generation capacity, supported by Single Buyer offtake arrangements. We view the extraordinary government support as very 'highly likely', if required, given the Group's essential role in the provision of electricity as a public service. 

For FY Dec 2025, pre-tax profit rose 6% y-o-y to RM6.18 bil, driven by the implementation of Regulatory Period 4, stronger commercial demand and lower borrowing costs despite higher debt. Working capital remained supported by healthy collections and the automatic fuel adjustment (AFA) mechanism.  

A one-off tax payment following the Federal Court's decision on Schedule 7B of the Income Tax Act 1967 and a heavier RM89.70 bil debt load (including lease liabilities which comprised about one-third) weakened leverage and cashflow metrics. The Group's gearing increased to 1.69 times while funds from operations debt coverage (FFODC) declined to 0.14 times (end-December 2024: 1.66 times and 0.22 times respectively). The indicators, however, are still commensurate with the Group's ratings, reflecting TNB's regulated earnings profile and expectations of sovereign support.

We expect TNB's performan