KUALA LUMPUR: MARC Ratings Bhd has reaffirmed its MARC-1IS/AA-IS ratings for UDA Holdings Bhd's Islamic Commercial Papers (ICP) Programme, valued at up to RM100 million, and its Islamic Medium-Term Notes (IMTN) Programme, with a combined aggregate limit of up to RM1 billion.
The ratings reflect MARC's evaluation of government support provided to UDA over the years, including grants and equity contributions through loan conversions.
"The rating agency notes that UDA's property development activities are mainly aligned with the government's socio-economic objectives.
"In accordance with MARC's notching principles on government-related entities, the ratings incorporate a two-notch uplift from UDA's standalone rating," it said.
MARC noted that UDA's stand-alone credit profile has deteriorated due to lower-than-anticipated take-up rates for its recent developments, including the flagship high-rise condominium project, Residensi 38 Bangsar, which is expected to raise its inventory levels in the near future.
"The group has also increased its borrowings to about RM1.0 billion as of the end of 1H2024 from RM703.8 million as of the end of 2023 to fund project developments. Accordingly, its standalone rating has been lowered to A from A+," it adds.
MARC stated that UDA's long-term rating outlook remains stable.