Moody’s affirms Petronas’ A2 rating with stable outlook 

KUALA LUMPUR, May 25 (Bernama) — Moody’s Investors Service has affirmed the A2 native forex issuer and international forex senior unsecured rankings of Petroliam Nasional Bhd (Petronas).

Moody’s has additionally affirmed the a2 Baseline Credit Assessment (BCA) of Petronas; an A2 ranking on the senior unsecured notes issued by Petronas Capital Ltd and assured by Petronas; the A2 ranking on the senior unsecured notes issued by Petronas Energy Canada Ltd (PECL) and assured by Petronas; and (P) A2 senior unsecured rankings on the $15 billion (Singapore greenback $1=RM3.19) medium-term notice programme arrange by Petronas Capital Ltd and PECL, and assured by Petronas.

The ranking outlook stays secure with Petronas’ A2 ranking reflecting its large-scale hydrocarbon reserves and prudent monetary administration. 

“The rating affirmation reflects our expectation that the company will maintain strong credit metrics and excellent liquidity through the oil price cycle,” mentioned Moody’s analyst Hui Ting Sim in a press release right now.

According to the assertion, the secure outlook is in step with the secure outlook on Malaysia’s ranking.

Petronas’ secure outlook is underpinned by the corporate’s giant money steadiness that allows its credit score profile to resist durations of heightened oil worth volatility or elevated money outflows because of greater capital spending or funds to the federal government within the type of dividends, royalties and taxes, it mentioned.

Moody’s expects Petronas’ credit score metrics to stay robust for its A2 ranking below the company’s medium-term Brent worth assumption of US$50-$70 per barrel. 

The firm will proceed to keep up a internet money place and generate earnings earlier than curiosity, taxes, depreciation, and amortisation (EBITDA) of RM90 billion to RM110 billion. 

Moody’s estimates that Petronas’ adjusted debt/capitalisation will likely be round 21 per cent-22 per cent and adjusted earnings earlier than curiosity and taxes (EBIT)/curiosity at round 14x-19x. 

“Should Brent prices remain around US$100 per barrel, the agency estimates Petronas’ EBITDA will increase to around RM140 billion to RM150 billion in 2022, from close to RM100 billion in 2021,” it mentioned.

Petronas’ capital spending will possible be RM40 billion to RM50 billion this yr, a rise from round RM34 billion in 2021. 

The greater capital spending will permit the corporate to arrest manufacturing decline in addition to fulfil its diversification ambitions, it mentioned. 

Petronas’ chemical subsidiary, Petronas Chemicals Group Bhd, introduced in May that it’s going to purchase Perstorp Holding AB (B3 secure) for €1.538 billion (€1=RM4.68). 

The transaction is absolutely funded by money readily available and is aligned with Petronas’ stepping out technique of increasing its capabilities within the speciality chemical compounds phase.

According to the Malaysian authorities’s (A3 secure) most up-to-date price range announcement, the corporate pays RM25 billion of dividends in 2022. 

However, it mentioned that requests for greater dividend funds by the federal government, particularly if there have been a rise within the authorities’s funding wants, can’t be dominated out.

“Nevertheless, greater oil costs supporting money movement technology at its giant upstream operations this yr will cushion the impression ought to such requests happen.

“Petronas has also demonstrated its ability to adjust its capital spending to minimise negative free cash flow if needed,” mentioned Moody’s.

Petronas has glorious liquidity, as of Dec 31, 2021, the corporate was in a internet money place amounting to RM67 billion, the assertion famous.

Petronas’ issuer ranking is one notch above Malaysia’s A3 foreign-currency issuer ranking, primarily based on the corporate’s strong standalone credit score high quality; its excessive proportion of income (73 per cent in 2021) generated from exports and worldwide operations, and its superior entry to worldwide capital markets. 

The firm’s higher-than-sovereign ranking additionally incorporates the federal government’s lengthy monitor file of permitting Petronas to function independently, regardless of its 100 per cent possession.

However, Moody’s mentioned Petronas’ BCA of a2 is constrained at no a couple of notch above Malaysia’s sovereign A3 ranking. 




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