MARC RATINGS ASSIGNS PRELIMINARY AA+IS RATING TO TI TNB GENCO SOLAR KENYIR 1'S PROPOSED SUKUK

MARC Ratings has assigned a preliminary AA+IS rating, with a stable outlook, to TI TNB Genco Solar Kenyir 1 Sdn Bhd's (TTSK1) proposed ASEAN Sustainability Sustainable and Responsible Investment (SRI) Sukuk Wakalah of up to RM2.0 billion.

TTSK1 is a special-purpose vehicle established to develop, own and operate a 595MWac floating solar facility with a 297.5MW/1,190MWh battery energy storage system (BESS) at Tasik Kenyir, Terengganu. The power generated will be supplied to DayOne Data Centers Malaysia II Sdn Bhd (DayOne Malaysia II), an indirect subsidiary of DayOne Data Centers Singapore Pte Ltd, under a 21-year bilateral energy supply contract (BESC). TTSK1 is 70%-owned by TNB Power Generation Sdn Bhd (TPGSB), a whollyowned subsidiary of Tenaga Nasional Berhad (TNB, AAA/Stable), and 30%-owned by Terengganu Incorporated Sdn Bhd, the Terengganu state government's strategic investment arm. Proceeds from the sukuk will finance 80% of the project's RM2.5 billion cost, with the remaining 20% funded by equity.

The rating incorporates a two-notch uplift on the high likelihood of strong and timely financial and operational support from TNB, TTSK1's ultimate parent, if required. This assessment reflects the project's strategic importance to TNB Group's renewable energy expansion and its strong financial and operational linkages with the group. TTSK1's standalone credit profile is underpinned by long-term revenue and demand visibility under the 21-year take-or-pay BESC with DayOne Malaysia II, a wellstructured project framework, and robust risk mitigants covering the construction and operational phases. These strengths are moderated by execution risks arising from the project's scale relative to the contractors' track records, variability in solar resource and plant performance, and concentration risk, given DayOne Malaysia II's status as the sole offtaker.

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