Statement on Rating Action Commentary by Fitch Ratings on PETRONAS

KUALA LUMPUR, 8 December 2020 – PETRONAS refers to the announcement by Fitch Ratings (“Fitch”) that it has downgraded our Long Term Foreign and Local Currency Issuer Default Ratings (IDRs) to BBB+ (Outlook Stable) from A- (Outlook Negative). The revision of the credit ratings was made following the downgrade of Malaysia’s Sovereign rating to BBB+ (Outlook Stable) from A- (Outlook Negative) published on 4 December 2020. 

Under Fitch’s Government-Related Entities Rating Criteria, PETRONAS’ ratings continue to be capped to that of the Sovereign so long as the company sustainably generates more than 10% of the revenues of the government.

PETRONAS has accounted for more than 15% of the Malaysian state’s revenue over the last five years. PETRONAS’ Standalone Credit Profile (“SCP”) as assessed by Fitch has remained unchanged, since 2016, at ‘aa-‘, which is 4 notches above that of the Sovereign compared to previous 3 notches above. The ‘aa-‘ SCP is maintained on the back of PETRONAS’ strong financial and business profile. PETRONAS has been in a net cash position since 2006 and the lowest through-the-cycle leverage and highest interest-coverage ratio among ‘AA-‘ rated peers. 

PETRONAS is also able to maintain its strong financial profile despite the economic downturn and disruptions following the COVID-19 pandemic. The ‘aa-’ SCP also reflects PETRONAS’ strong business profile, its position as a large-scale and fully integrated oil and gas producer as well as diverse operations in upstream, liquefied natural gas (LNG), and downstream refining and petrochemicals. 

PETRONAS would like to emphasise that our strong fundamentals remain unchanged. PETRONAS has consistently maintained a conservative financial policy, stringent capital discipline and focus on cost optimisation towards ensuring preservation of liquidity which has enabled the company to withstand volatility and shocks in the market.