RAM Ratings affirms AAA(s) issue ratings of Sarawak state SPVs Infracap Resources and Aquasar Capital

Published on 01 Aug 2023.

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RAM Ratings has affirmed the AAA(s)/Stable ratings of Infracap Resources Sdn Bhd’s RM15 billion Sukuk Murabahah Programme (2021/2041) and Aquasar Capital Sdn Bhd’s RM1,500 million Sukuk Murabahah Programme (2014/2029). 

Infracap Resources and Aquasar Capital serve as funding conduits for various infrastructure development projects and strategic investments of the Sarawak government. While the state government has not explicitly guaranteed the sukuk issued by these special-purpose vehicles, the ratings of the sukuk take into consideration Sarawak's credit strength. This is because the state has demonstrated commitment to meet their periodic principal and profit payments through annual budgetary allocation.

The credit ratings are supported by Sarawak’s large cash reserves and proven track record of prudent financial management. The ratings are also anchored by the state’s political and economic importance to the federal government. While debts are projected to rise to support infrastructure development and fund strategic investments over the medium term, this is balanced by the anticipated improvement in revenue generation. We have a positive view on Sarawak's long-term growth prospects from the infrastructure development push outlined in the state's Post Covid-19 Development Strategy 2030 (PCDS) and the spillover effects from the development of Indonesia's new capital Nusantara in Kalimantan. Nevertheless, these strengths are moderated by prevailing development gaps in the state, particularly concerning poverty incidence and human capital development.

In 2022, Sarawak’s gross domestic product (GDP) is expected to record a much stronger growth of between 5.5% to 6.5% (2021: 2.9%). This growth is attributed to the resumption of economic activities as well as robust demand for its commodities, with substantial contributions from the oil and gas sector. Notably, exports surged 50% y-o-y, driven by both higher volumes and prices of commodities. Looking ahead, Sarawak’s 2023 GDP growth is expected to slightly moderate to a still respectable 5% to 6%, due to the more challenging global growth scenario.

Supported by the strong economic performance, the state’s revenue jumped 56% y-o-y to RM11.9 bil in 2022 (2021: RM7.62 bil). More than 70% of the revenue is derived from the oil and gas sector in the form of sales tax, royalties, and dividends from its strategic investments. The higher revenues and a reduction of fiscal stimulus returned Sarawak to surplus of RM1.1 bil (2021: deficit of RM3.7 bil). For 2023, the state expects revenue to slip 7.3% y-o-y due to the impact of lower commodity prices. Despite this, Sarawak is still expected to generate a modest surplus for the year.


Analytical contact
Thong Mun Wai
(603) 3385 2522


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.

Published by RAM Rating Services Berhad
© Copyright 2023 by RAM Rating Services Berhad

Rating Rationale

Ratings on Aquasar Capital Sdn.Bhd.