Petronas rating revised to ‘negative’
Fitch Ratings has revised its outlook on Petroliam Nasional Bhd’s (Petronas) long-term local currency issuer default rating (IDR) to “negative” from “stable”.
The global rating agency said its foreign and local currency IDRs had been affirmed at A and its shortterm foreign currency IDR at F1. The outlook on its long-term foreign currency IDR remains “negative”.
Fitch has affirmed the national oil company’s foreign currency senior unsecured rating at A, including debt issued by Petronas Capital Ltd and guaranteed by Petronas.
Petronas Global Sukuk Ltd’s US dollar-trust certificates have also been affirmed at A.
The rating agency said the revision on Petronas followed the revision of Malaysia’s outlook to “negative” and the affirmation of its IDRs at A-/A.
It said the ratings were constrained by the sovereign, as Petronas is 100% owned by the Malaysian Government ( A-/A/Negative). Its current foreign and local currency IDRs were constrained by Malaysia’s A country ceiling and local currency IDR, respectively.
Fitch had revised its outlook on Petronas’ foreign currency IDR to “negative” from “stable” in September 2012 due to the sovereign’s growing influence on the company’s free cash generation.
It added that it reflected the likelihood that Fitch might cap this rating at Malaysia’s foreign currency IDR of A- rather than at the country ceiling of A.
“The sovereign has significant influence over the company’s financial policies and strategies, and Petronas’ dividends continue to be important to Government funding,” it said.
“Despite the heavy financial commitments imposed by the state, Petronas continues to maintain a strong standalone credit profile. Its leverage as measured by funds from operations (FFO) adjusted net leverage and FFO interest coverage were negative at 0.7 times and 36.7 times, respectively, for 2012.
“Fitch continues to believe Petronas is Malaysia’s strongest foreign currency debtor,” it added.