Moody’s Ratings affirms the Aaa long-term issuer rating and aaa Baseline credit assessment (BCA) of Temasek Holdings in a statement issued on Sept 11.
“The outlook on all ratings is stable,” the credit rating agency added.
For its ratings rationale, Moody’s says that it assesses Temasek as an investment holding company and financing vehicle, and on this basis, Temasek continues to maintain a net cash position as at March 2025.
Temasek’s own debts are not guaranteed by the government of Singapore, although it is wholly-owned by the minister for finance and has a large portfolio exposure to Singapore, the note by Moody’s explains.
“Over half of its portfolio was denominated in Singapore dollars and 27% of the portfolio by underlying assets was in Singapore in the year ended March 31. As a result of this exposure, we believe that the interests of the government and Temasek are naturally aligned,” it says.
Moody’s expects Temasek to maintain a sizable reserve of cash and liquid securities, which provide for strong debt service coverage to mitigate potential volatility in cash flow and asset value.
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It also expects Temasek's internal funds (cash, liquid investments, dividend and investment income, distribution from funds, and divestment proceeds) to cover its committed cash requirements (principally, interest, current debt repayments and operating overheads), and dividends to the government over the next 12-18 months.
This Aaa rating is a reflection of the aforementioned “excellent” liquidity.
Despite its 100% ownership by the government which lends it some of its rating benefits, Temasek’s standalone credit quality is aaa, reflecting Moody’s expectations that Temasek’s credit metrics will remain strong and the company will retain its prudent and conservative approach to its investment and funding strategies.
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Moody’s could cut Temaske’s BCA should the company undertake aggressive investments that significantly worsen the credit quality of its investment portfolio; if the amount and quality of the company's cash and near-cash resources deteriorate significantly; or if there are indications of moral hazard behavior.
"We expect the company to maintain a conservative financial profile over the next 12-18 months, with the net debt to market value of its portfolio assets (excluding cash) staying below 5% and funds from operations (FFO) interest coverage above 15x," says Rachel Chua, a Moody's Ratings vice president and senior analyst.
