KUALA LUMPUR: Yinson Holdings Bhd plans to set up an Islamic medium-term notes programme up to RM1b for working capital, refinancing of existing financing/borrowings.

       In a filing with Bursa Malaysia on Monday, it said it had lodged with the Securities Commission (SC) for the Sukuk Wakalah programme based on the Shariah principle of Wakalah Bi Al-Istithmar.

       Yinson said this was pursuant to the SC’s Guidelines on Unlisted Capital Market Products under the Lodge and Launch Framework.

       The first issuance shall be made within 60 business days from the lodgement date.

       “The Sukuk Wakalah programme is structured based on the Shariah principle of Wakalah Bi Al-Istithmar and has been assigned rating of A+IS and A1 by Malaysian Rating Corporation Bhd and RAM Rating Services Bhd respectively,” it said.

       Yinson said the programme caters for the issuance of rated and senior ranking Sukuk Wakalah, with flexibility for Yinson to issue sustainability-linked Sukuk Wakalah in addition to Asean Green/Social/Sustainability/SRI Sukuk.

       Meanwhile, the Malaysian Rating Corporation (MARC) has assigned a preliminary rating of A+IS to Yinson's proposed RM1bil Islamic MTN programme with a stable outlook. This follows the corporate credit rating of A+ that MARC assigned to Yinson on June 23, 2021.

       The rating on the IMTN programme is driven by Yinson’s strong business profile in the floating, production, storage and offloading vessels (FPSO) segment, sizeable long-term FPSO contracts and healthy profit margins. The key moderating factors are the weak-to-moderate credit profile of most of its charterers and the high leverage position of its holding company due to recourse borrowings.

       With five FPSOs (a sixth is under construction) and one FSO, Yinson is considered as a large independent global player in the FPSO segment.

       The group has an FPSO order book of US$9.7 billion as at end-July 2021 with firm contract tenures up to 25 years.

       "We view that as a result of oil price recovery since 2Q 2020, the prospects for the upstream oil and gas industry is stronger than it has been in recent years and would support growth in the FPSO segment," it said.

       MARC pointed out for the first half of financial year ending January 2022 (1HFY2022), group revenue (excluding construction revenue from a new FPSO) was relatively stable at RM696mil (1HFY2021: RM684mil), owing mainly to the recurrent income from charterers under existing long-term contracts.

       Operating profit margin stood at 27.6%. Gross debt-to-equity (DE) ratio stood at 3.41 times (net DE: 2.63 times).

       "Excluding non-recourse financing, Yinson’s DE ratio would be 1.78 times as at end-July 2021 but this is expected to increase to 2.16 times, assuming full drawdown of the rated programme," MARC said.