KUALA LUMPUR, Sept 22 () — Moody's Investors Service has affirmed the foreign and local currency issuer ratings of Petronas LNG Ltd (PLL) at ‘Baa1’ and maintained its stable outlook.

It said the rating affirmation reflects PLL's full ownership by Petroliam Nasional Bhd (Petronas, A2 stable) as well as its strong operational and financial integration with its parent.

"The close linkages support our positioning of PLL's Baa1 ratings at two notches below the A2 ratings of its ultimate parent," said its assistant vice-president and analyst Hui Ting Sim in a statement today.

PLL is ultimately wholly owned by Petronas, Malaysia's national oil company, which is in turn wholly owned by the Malaysian government (A3 stable).

She noted that Petronas has a firm track record of providing financial support to PLL, as demonstrated by equity injections of US$993 million in PLL since 2015.

"PLL is also able to draw from Petronas' umbrella credit facility for liquidity management. Through an integrated treasury function with its parent, PLL's cash is held centrally by Petronas and cash flow requirements are shared with the latter,” Hui said.

In 2022, she noted that PLL fully redeemed its preference shares and paid a total dividend of US$673 million after reporting exceptionally strong performance in the past two years, hence, Moody's expects PLL will continue to upstream its surplus cash flow as dividends to its parent.

Nonetheless, the rating agency also expects that Petronas will continue to provide financial support to PLL if required, she added.

Hui also pointed out that Petronas’ support for PLL extends beyond financial assistance whereby the parent provides PLL with significant management support and oversight while PLL also reports on risk and governance on a monthly basis to a committee chaired by Petronas.

"PLL's ratings are based on a top-down approach that considers the company's full ownership by Petronas, its strong operational and financial integration with Petronas, and the willingness and ability of the mother company to extend support to PLL in times of distress,” she reiterated.

On the factors that could lead to changes in the ratings, Hui said Moody's will consider an upgrade only if Petronas' rating is upgraded.

"Meanwhile, Moody's could downgrade PLL's ratings if Petronas' rating is downgraded and there is a decrease in Petronas’ ownership of PLL or there is a reduction in the mother company's supervision of and operational and financial support to PLL,” she added. — Bernama