KUALA LUMPUR: Standard & Poor's Ratings Services has affirmed its long-term corporate credit ratings on Petroliam Nasional Bhd (foreign currency A-/Stable/--; local currency A+/Stable/--) along with the 'axAAA' ASEAN scale rating. The outlook is stable.
The ratings agency said on Wednesday, Oct 13 it affirmed the 'A-' issue ratings on the senior unsecured bonds issued by Petronas, the guaranteed notes issued by Petronas Capital Ltd. and guaranteed by Petronas, and the trust certificates issued by Petronas Global Sukuk Ltd.
'The corporate credit rating on Petronas reflects the company's critical role and integral link with the Malaysian government and Petronas' stand-alone credit profile, which we assess to be 'aa-',' it said.
S&P, however, said Petronas remained sensitive to government intervention. Therefore, the long-term rating was equalised with the sovereign credit rating on Malaysia (foreign currency A-/Stable/A-2; local currency A+/Stable/A-1; ASEAN scale axAAA/axA-1+).
"Petronas performs a critical role in supporting the power and industrial sectors and developing national oil and gas infrastructure," said S&P credit analyst Andrew Wong.
"It is also highly integrated with the Malaysian government. We therefore believe there is an almost certain likelihood that the government would provide timely and sufficient extraordinary support to Petronas in the event of financial distress,' he said.
Petronas' stand-alone credit profile reflected the company's strong business risk profile, he added.
Wong said Petronas' financial risk profile remains minimal although its cash flow coverage ratio weakened as expected in fiscal 2010.
'We expect Petronas' cash flow protection measures to remain adequate for the rating in the next two years, given the company's favorable cost base, prudent leverage policy, and increasing contribution from overseas projects.
'However, we expect no improvement in cash flow coverage ratios under our forecast scenario, given Petronas has planned high capital expenditure requirements of about RM40 billion per annum and expected shareholder returns of RMR30 billion per annum. Upstream cost pressures could also affect margins, resulting in Petronas generating negative discretionary operating cash flow. This may put pressure on our stand-alone credit profile assessment of 'aa-',' he said.
The ratings agency said on Wednesday, Oct 13 it affirmed the 'A-' issue ratings on the senior unsecured bonds issued by Petronas, the guaranteed notes issued by Petronas Capital Ltd. and guaranteed by Petronas, and the trust certificates issued by Petronas Global Sukuk Ltd.
'The corporate credit rating on Petronas reflects the company's critical role and integral link with the Malaysian government and Petronas' stand-alone credit profile, which we assess to be 'aa-',' it said.
S&P, however, said Petronas remained sensitive to government intervention. Therefore, the long-term rating was equalised with the sovereign credit rating on Malaysia (foreign currency A-/Stable/A-2; local currency A+/Stable/A-1; ASEAN scale axAAA/axA-1+).
"Petronas performs a critical role in supporting the power and industrial sectors and developing national oil and gas infrastructure," said S&P credit analyst Andrew Wong.
"It is also highly integrated with the Malaysian government. We therefore believe there is an almost certain likelihood that the government would provide timely and sufficient extraordinary support to Petronas in the event of financial distress,' he said.
Petronas' stand-alone credit profile reflected the company's strong business risk profile, he added.
Wong said Petronas' financial risk profile remains minimal although its cash flow coverage ratio weakened as expected in fiscal 2010.
'We expect Petronas' cash flow protection measures to remain adequate for the rating in the next two years, given the company's favorable cost base, prudent leverage policy, and increasing contribution from overseas projects.
'However, we expect no improvement in cash flow coverage ratios under our forecast scenario, given Petronas has planned high capital expenditure requirements of about RM40 billion per annum and expected shareholder returns of RMR30 billion per annum. Upstream cost pressures could also affect margins, resulting in Petronas generating negative discretionary operating cash flow. This may put pressure on our stand-alone credit profile assessment of 'aa-',' he said.
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