Petronas considers first bond sale in five years

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Hind Al Soulia - Riyadh - The potential bond sale could come at a time when the cost of insuring Malaysian sovereign debt is at its lowest

Jan 4, 2020

January 4, 2020

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Petroliam Nasional, Malaysia’s state-owned oil company, is considering selling global bonds for the first time in nearly five years, according to people with knowledge of the matter.

Petronas, as the company is known, asked banks to submit pitches for the proposed dollar-denominated, benchmark-sized bonds last month and is expected to pick advisers soon, said the people, asking not to be identified as the discussions are private. The last time the oil major tapped the global market was in 2015 when it sold $5 billion of dollar bonds.

The potential bond sale could come at a time when the cost of insuring Malaysian sovereign debt is at its lowest in more than a decade. The ringgit has strengthened 1.6 per cent against the dollar in the past month, making it the second best-performing currency in Asia.

Petronas is banking on Americas to help raise reserves and maintain production rates, its chief executive Wan Zulkiflee Wan Ariffin said in an interview in April. The state-owned company will allocate a larger share of its future capital expenditure toward projects from Canada to Brazil as it completes a $27 billion refinery and petrochemicals project at home, he said at that time.

There hasn’t been a final decision on the size and timeline of the proposed global bond sale as deliberations continue, the people said. Petronas can still decide against proceeding with an issuance, they added. A representative for Petronas didn’t immediately respond to requests for comment.

Moody’s Investors Service gives Petronas an A2 rating, which is the sixth-highest investment grade and a notch above Malaysia’s sovereign rating. The oil giant has six outstanding dollar bonds worth a total of $6.5 billion, in which $1.25 billion of notes are set to mature on March 18, according to data compiled by Bloomberg.

Updated: January 3, 2020 08:31 PM

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