MARC RATINGS UPGRADES RATINGS ON SOUTHERN POWER AND JIMAH EAST POWER FOLLOWING REASSESSMENT OF TNB SUPPORT

MARC Ratings has upgraded the ratings of Southern Power Generation Sdn Bhd (Southern Power) and Jimah East Power Sdn Bhd (JEP) following a reassessment of the likelihood of parental support from their ultimate holding company, Tenaga Nasional Berhad (TNB). The rating upgrades reflect MARC Ratings' view that there is now a high likelihood of parental support, underpinned by the increasing strategic importance of Southern Power's and JEP's generation assets and their critical role in maintaining the reliability of electricity supply in Peninsular Malaysia.

The reassessment is driven by MARC Ratings' greater clarity regarding TNB's commitment to preserving generation adequacy and ensuring reliable capacity amid rising electricity demand, including demand arising from the rapid expansion of data centres. Against this backdrop, any operational or financial disruption at these assets could have significant implications for TNB's generation objectives, system reliability and national energy security. MARC Ratings therefore believes that TNB is likely to provide timely financial and operational support, if required. This strengthened expectation of parental support underpins the rating upgrades.

Accordingly, MARC Ratings has upgraded the ratings on Southern Power's outstanding RM2.7 billion Sukuk Wakalah and JEP's outstanding RM7.67 billion Sukuk Murabahah to AA+IS/Stable. The ratings incorporate a two-notch uplift from the issuers' standalone credit profiles, reflecting the stronger assessment of parental support.

TNB holds an indirect 70% stake in both entities through its wholly-owned subsidiary, TNB Power Generation Sdn Bhd (TPGSB). Southern Power's 1.44GW gas-fired plant and JEP's 2.0GW coalfired plant account for approximately 9.5% and 13.2%, respectively, of TPGSB's contracted generation capacity, underscoring their strategic importance within TNB'sc