‘Change in Sarawak political affiliation to have no impact on Aquasar Capital’s issue rating’

KUCHING: The Sarawak ruling coalition’s departure from Barisan Nasional on June 12 will not affect the AAA( s) issue rating of Aquasar Capital Sdn Bhd’s RM1,500 mil lion Sukuk Murabahah Programme ( 2014/2029), said RAM Rating Services Bhd ( RAM).

The rating reflects Sarawak’s credit profile, given that Aquasar Capital is a special- purpose vehicle of the state government.

“We expect the Sarawak government to remain firmly committed to meeting obligations in relation to Aquasar Capital, evinced by the state’s strong financial position and the fact that payments of the sukuk are budgeted and borne by the state,” noted Esther Lai, RAM’s head of Sovereign Ratings in a statement.

Sarawak’s track record of fiscal surpluses has resulted in the accumulation of ample reserves amounting to RM29 billion as at end-2016, which provides a strong coverage of 3.3 times the state’s total adjusted debts.

The bulk of these debts are longterm, allowing the state sufficient time to build up its sinking fund for repayment.

While the state government has projected a fiscal deficit of RM256 million for FY18 owing to an expansionary budget, along with lower receipts from hydrocarbons, forest produce and dividend income, substantial fiscal reserves are more than adequate to cushion temporary shocks.