MARC downgrades YNH's RM700mil sukuk on weak cash flow
KUALA LUMPUR: MARC Ratings has downgraded YNH Property Bhd's RM700 million Sukuk Wakalah programme rating to BIS from BBIS and placed it on MARCWatch Negative, citing weakened liquidity and heightened refinancing and repayment risks.
MARC Ratings has lowered YNH Property Bhd's rating on its RM700 million Sukuk Wakalah program to BIS and marked it as MARCWatch Negative. The downgrade stems from YNH's weak cash flow generation, ongoing reliance on asset sales to cover financial obligations, and limited earnings visibility. The rating agency pointed to a shortfall in the sukuk reserve account, which fell to RM54.4 million as of October 27, falling short of the required RM61.2 million and triggering a technical default.
YNH has a 30-day window to resolve this shortfall to avoid default. Despite the company's promise to rectify the shortfall, the existence of the reserve-account shortfall highlights YNH's liquidity challenges and its limited ability to fund itself through internal cash flows. The MARCWatch Negative rating suggests significant uncertainty over YNH's ability to meet its RM170 million sukuk maturity on February 26, 2027, which hinges on the completion of planned asset disposals.
The company's primary disposal target is the RM170 million sale of its Desa Sri Hartamas land to Sunway Living Space Sdn Bhd, expected to generate RM105 million in net proceeds after settling outstanding loans. Additionally, YNH is disposing of a 1.05-hectare freehold land parcel in Kuala Lumpur to Chin Hin Property (JSI) Sdn Bhd for RM455 million, with completion projected by January 2027.
While these disposals may help alleviate liquidity pressures, the proximity of the expected disposal completion to the February 2027 sukuk maturity leaves YNH with limited room to absorb any further delays. YNH's weak operating performance, with revenue falling to RM106.9 million in the financial year ending 2026, further compounds the liquidity issues.
The company has only a few active developments, primarily Solasta Dutamas in Kuala Lumpur and a shop lot project in Manjung, Perak, which provide limited near-term earnings and operating cash flow generation, thereby reducing YNH's ability to bolster its liquidity organically.
Written by urgent.news from New Straits Times's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
