S&P's Ratings On Petronas Unaffected By Revised Oil Price Assumptions

KUALA LUMPUR, Jan 22 (Bernama) -- Standard & Poor's Ratings Services' recent revision of oil price assumptions will not immediately affect the rating of Petroliam Nasional Bhd's (Petronas) foreign currency A-/Stable/--; local currency A/Stable/--; axAAA/--). In a statement, Standard & Poor's said Petronas would maintain its critical policy role for Malaysia, its large direct and indirect contribution to the country's budget and, its integral link with the government through full state ownership. "Therefore, the ratings and the outlook on the company and its notes will continue to mirror those on the sovereign credit rating on Malaysia (foreign currency: A-/Stable/A-2; local currency: A/Stable/A-1; axAAA/axA-1+)," it said. Standard & Poor's revised oil price assumptions would also have no immediate effect on Petronas' 'aa' stand-alone credit profile (SACP). It expected the rise in PETRONAS' net leverage to be very gradual over the next two years, given the company's large cash position of US$30.86 billion (RM133 billion) as of Sept 30, 2015. (US$1=RM4.30) The ratings agency viewed Petronas' capital spending plan of US$81.21 billion (RM350 billion) over 2015-2019 as substantial and that the company remained committed in maintaining production and to projects with long lead times. "The company has a record of prudent financial policies and has maintained a robust financial profile through a number of price cycles, so we believe it can adjust spending more aggressively or delay investments over the next three to six months if oil prices remain low," it said. On dividend payments to the government, Standard & Poor's said it would decline to RM16 billion this year from RM26 billion last year, and further adjustments could take place in 2017. The ratings agency said each reduction in aggregate annual capital spending and dividends of RM10 billion would improve the company's debt-to-Earnings Before Interest, Tax, Depreciation and Ammortisation ratio by about 0.1 times. -- BERNAMA