KUALA LUMPUR (Oct 4): S&P Global Ratings is removing the 'under criteria observation' (UCO) designation and lowering the rating on Tenaga Nasional Bhd's (TNB) senior notes to 'BBB' from 'BBB+'.

The credit ratings provider said in a statement today the move follows the review of its senior unsecured issue-level rating for TNB after publishing its revised issue ratings criteria "Reflecting Subordination Risk In Corporate Issue Ratings" on Sept 21.

"With our criteria review completed, we are removing the UCO designation and are lowering the issue rating on Tenaga's notes and those that it guarantees to 'BBB' from 'BBB+'," said S&P.

"These rating actions stem solely from the application of our revised issue rating criteria and do not reflect any change in our assessment of the corporate credit rating for issuer of the affected debt issues," it added.

S&P explained its rating action takes into consideration the capital structure of TNB as of May 31, 2017, which consists of RM24.51 billion of secured debt and RM12.47 billion unsecured debt issued by TNB and its subsidiaries.

"We therefore have arrived at the analytical conclusion that the senior unsecured debt issued or guaranteed (for TNB Global Ventures Capital Bhd) by Tenaga is rated 'BBB'. That is a notch below the corporate credit rating of Tenaga, reflecting significant subordination of this senior unsecured debt relative to other debt in Tenaga's consolidated capital structure," S&P said.