RAM Ratings reaffirms AAA(s) issue rating of Sarawak government funding conduit Aquasar Capital

Published on 28 Dec 2021.

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RAM Ratings has reaffirmed the AAA(s)/Stable rating of Aquasar Capital Sdn Bhd’s RM1,500 million Sukuk Murabahah Programme (2014/2029). 

Aquasar Capital acts as the Sarawak government’s funding conduit for the sukuk programme to fund the development of the Kuching Centralised Sewerage System. While the state government has not extended an explicit guarantee to Aquasar Capital in respect of the sukuk, the issue rating reflects Sarawak’s credit strength as periodic principal and profit payments are borne by the state government through annual budgetary appropriation. 

The reaffirmation of the rating is based on Sarawak’s strong financial position, underpinned by ample fiscal reserves of RM25.1 bil as at July 2021 which comfortably cover hefty total adjusted debts amounting to RM12.7 bil. Sarawak’s fiscal revenue is the largest of all Malaysian states, with sizeable receipts from (1) hydrocarbon royalties, (2) dividends on investments in downstream oil and gas companies, and (3) additional revenue sources provided for by the Federal Constitution such as duties and sales taxes. The recent implementation of the State Sales Tax on petroleum products has significantly expanded the state’s already broad revenue base.

The Sarawak economy is expected to rebound strongly from the severe impact of the COVID-19 pandemic in view of the state government’s significant policy support measures and an accelerated vaccination rate.

The rating may come under pressure in the event of persistently low commodity prices and/or a marked increase in committed debt and liabilities that materially impact Sarawak’s fiscal position. The state’s ambitious medium-term development programme may require funding in the future. We take cognisance of the state government’s fiscal discipline in managing its liabilities.


Analytical contact
Jason Fong
(603) 3385 2616


The credit rating is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment on the security’s market price or its suitability for a particular investor, nor does it involve any audit by RAM Ratings. The credit rating also does not reflect the legality and enforceability of financial obligations.

RAM Ratings receives compensation for its rating services, normally paid by the issuers of such securities or the rated entity, and sometimes third parties participating in marketing the securities, insurers, guarantors, other obligors, underwriters, etc. The receipt of this compensation has no influence on RAM Ratings’ credit opinions or other analytical processes. In all instances, RAM Ratings is committed to preserving the objectivity, integrity and independence of its ratings. Rating fees are communicated to clients prior to the issuance of rating opinions. While RAM Ratings reserves the right to disseminate the ratings, it receives no payment for doing so, except for subscriptions to its publications.

Similarly, the disclaimers above also apply to RAM Ratings’ credit-related analyses and commentaries, where relevant.

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Ratings on Aquasar Capital Sdn.Bhd.