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RAM Ratings assigns inaugural AAA final rating to Sabah Energy Corporation’s proposed sukuk
Published on 10 Jul 2026.
RAM Ratings has assigned a final AAA rating to Sabah Energy Corporation Sdn Bhd’s (SEC or the Group) proposed Islamic Medium-Term Notes (Sukuk Wakalah) Programme (Sukuk or the Programme) of up to RM3.0 billion. The rating has a stable outlook. Wholly owned by the Sabah state government, SEC was established as a state oil and gas (O&G) company and currently under the purview of the Sabah Energy Corporation (Successor Company) Enactment 1997.
The Sukuk’s rating reflects the Group’s strong credit linkage to the Sabah state government (state implicit strength of AAA/stable/P1), underpinned by its essential role in developing the State’s energy resources. Following the acquisition of key gas pipelines from Petroliam Nasional Berhad (PETRONAS) pursuant to a Commercial Collaboration Agreement, SEC expanded its role as the State’s primary natural gas distributor by entering into Gas Sales Agreements with PETRONAS to source and supply natural gas to all five independent power producers and major industrial facilities in the State.
Given SEC’s essential function in the State’s energy sector and alignment with the Sabah state government’s energy development agenda, SEC enjoys solid regulatory support from the Sabah state government as well as assistance to facilitate approvals, energy investments and revenue growth for the Group. Should the need arise, we expect the likelihood of support from the State to be ‘almost certain’, although the Group has a proven profitability track record.
The Group through its wholly-owned Asian Supply Base Sdn Bhd (ASB), has been operating an offshore supply base in Labuan for over four decades, supporting upstream activities in Sabah and Sarawak. While new competition from the Borneo O&G Supply Base poses a threat to demand from Sarawak, ASB’s established track record, customer relationships and diversification strategy may partly mitigate this. Nonetheless, performance remains exposed to O&G price volatility, with sustained weakness likely to be negative.
The Group is expanding into power generation to become Sabah’s leading provider, with a current portfolio comprising a 5 MW solar farm, a majority stake in a 100 MW gas-fired plant and minority stakes in two others, alongside a pipeline of projects. This expansion aligns with its role as the State’s energy company and strengthens its presence across the energy value chain. While supportive of long-term growth and sustainability goals, it exposes the Group to operating and execution risks, including delays, cost overruns and potential variability in returns from minority investments.
Analytical contacts
Karin Koh, CFA
(603) 2708 8237
karin@ram.com.my
Chong Van Nee, CFA
(603) 2708 8210
vannee@ram.com.my
Media contact
Sakinah Arifin
(603) 2708 8212
sakinah@ram.com.my
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.
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Similarly, the disclaimers above also apply to RAM Ratings’ credit-related analyses and commentaries, where relevant.
Published by RAM Rating Services Berhad
© Copyright 2026 by RAM Rating Services Berhad
