Moody’s affirms ‘A1’ ratings on Petronas notes, sukuk with ‘stable’ outlook
KUALA LUMPUR: Moody’s Investors Service has affirmed the “A1” domestic issuer and foreign currency senior unsecured ratings of Petroliam Nasional Bhd (Petronas), reflecting the company’s standalone credit quality as captured in its “a1” baseline credit assessment (BCA).
The credit rating agency said Petronas’ “a1” BCA was supported by its large-scale hydrocarbon reserves, strong financial metrics, conservative financial policies and solid liquidity profile.
Moody’s also affirmed the “A1” rating on senior unsecured notes issued by Petronas Capital Ltd and guaranteed by Petronas, (P) “A1” rating on the US$15 billion (RM61.5 billion) medium-term note programme and “A1” rating on the sukuk issued through Petronas Global Sukuk Ltd.
Moody’s said Petronas’ foreign currency rating was two notches above Malaysia’s foreign currency bond rating, based on its extremely strong standalone credit profile, a high proportion of revenue from exports and international operations, a high degree of financial flexibility and a long track independent operation.
The “stable” outlook on the rating reflects Moody’s expectation that Petronas would maintain its strong credit profile over the next 12 to 24 months, while continue to adjust its spending on operating and capital expenditure to protect its financial position.
“The affirmation of Petronas’ ratings reflects our expectation that the company will maintain its strong operating profile, credit metrics and liquidity as it continues to generate free cash flow in an improved oil price environment and as it nears the end of its capital spending cycle,” said Moody’s senior vice-president Vikas Halan.
However, he said potential changes to government policies for the oil and gas sector could affect Petronas’ position as the sole owner of the country’s petroleum resources, and increase the royalties paid on its upstream oil and gas production.
Moody’s said Petronas’ financial profile and liquidity position were stronger than those of its higher-rated global peers, and it thus had a cushion to absorb some deterioration in its credit metrics before its ratings faced downward pressure.