Updated: Wednesday July 31, 2013 MYT 3:42:24 PM
KUALA LUMPUR: Fitch Ratings has revised the Outlook on Petroliam Nasional Bhd's (Petronas) long-term local currency issuer default rating (IDR) to Negative from Stable, just a day after revising Malaysia's Outlook to Negative.
The ratings agency said on Wednesday that Malaysia's foreign- and local currency IDRs were affirmed at 'A' and its short-term foreign-currency IDR at 'F1'. The Outlook on the long-term foreign currency IDR remains Negative.
Fitch affirmed Petronas' 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'.
Fitch said the latest action 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 sovereign where 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 revised the Outlook on Petronas' Foreign Currency IDR to Negative from Stable in September 2012 due to the sovereign's growing influence over the company's free cash generation.
"This reflects the likelihood that Fitch may 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.
Fitch said despite the heavy financial commitments imposed by the state, Petronas continued 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 said it continued to believe Petronas was Malaysia's strongest foreign currency debtor.
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