Sarawak gets ‘A-‘ rating for stable earnings outlook

The Darul Hana Bridge is a symbol and landmark of Sarawak. Photo by Michael Liew.

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KUCHING, Dec 24: Sarawak has been awarded ‘A-‘rating from S&P Global Ratings for its stable earnings outlook.

According to, Sarawak is being commended for its exceptional budgetary performance and liquidity that will likely mitigate its elevated debt, and support its creditworthiness.

In a statement today, S&P Global Ratings had also affirmed its ratings on Equisar International Inc’s (EII) US$800 million notes (due June 2026) and SSG Resources Ltd’s US$800 million notes (due October 2022).

Sarawak is reported to be the ultimate owner of EII and SSG.

S&P Global explained that the rating of Sarawak was substantiated by its large cash surpluses and ability to generate revenue from its natural resources.

Sarawak’s prudent policy-making and financial management has also been highlighted as factors leading to its strong fiscal performance.

The State Sales Tax, which was introduced last year, was also a contributing factor which S&P Global Ratings held that the prospect will likely strengthen the budgetary performance and support the development of the state.

Although the rating agency believed that Sarawak has a stronger stand-alone credit than Malaysia as a whole, it however does not expect the state to maintain stronger credit characteristic than Malaysia in a stress scenario due to Sarawak’s less diversified economy.

S&P observed that potential macroeconomic stress, particularly coming from the resources sector, will have a larger impact on Sarawak’s revenue than Malaysia.

The report further pointed out that as Sarawak still depends on the federal government for funding on public services such as healthcare, social security and pensions, this could suffer setback in a ‘sovereign default scenario’.— DayakDaily