Dr M brushes off concerns over Moody's rating revision on Petronas

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KUALA LUMPUR (June 24): The recent downgrade on Petroliam Nasional Bhd's (Petronas) domestic issuer and foreign currency senior unsecured ratings is not expected to affect the national oil and gas (O&G) company, said Prime Minister Tun Dr Mahathir Mohamad.

Speaking to reporters after delivering his keynote address in the 20th Asia Oil and Gas Conference (AOGC) 2019 today, Dr Mahathir downplayed the re-rating, which came due to the close credit linkages between the O&G company and the Malaysian government.

"Moody's assessment is not necessarily right," said Dr Mahathir.

"We cannot simply tell them as they are independent… [but] sometimes their assessment is not correct. From what we see Petronas is doing, I am confident this downgrading will not affect Petronas," said Dr Mahathir.

On Friday, Moody's downgraded Petronas' domestic issuer and foreign currency senior unsecured ratings to A2 from A1.

This was despite the rating agency concurrently upgrading the outlook for the national oil corporation to "stable" from "negative".

"Even though Petronas' credit metrics remain strong for its ratings, the close credit linkages between the Government of Malaysia (A3 stable) and Petronas cannot support a rating for Petronas," the rating agency said in its statement on Friday.

Concurrently, Dr Mahathir said Malaysia "does not necessarily follow the opinion of rating agencies" regarding the country's rating profile, which is affected by concerns over its federal government debt level and reduced fiscal flexibility under current fiscal policies.