- Petronas Capital Limited intends to issue three senior unsecured USD bonds with tenors of five years, ten years and thirty years respectively. The initial price guidance is approximately 5.3% area (U.S. 5-year Treasury yield + 120 basis points), 5.6% area (U.S. 10-year Treasury yield + 130 basis points) and 5.6% area (U.S. 30-year Treasury yield + 150 basis points) respectively. The proceeds from the bond issuance are used for general corporate purposes.
- All three bonds are guaranteed by Petroliam Nasional Berhad (Petronas), with the guarantor’s credit ratings at A- / BBB+ (S&P / Fitch). The bonds are expected to receive an A- rating from S&P.
- The three bonds have issuer call options, allowing the issuer to call the bonds at par value within one month, three months, and six months prior to maturity for the five-year, ten-year, and thirty-year bonds, respectively.
- Established in 1974, Petronas is a wholly-owned subsidiary of the Malaysian government. Its operations span the upstream, midstream and downstream energy sectors, including oil and gas exploration and production, oil refining, sales and trading of petroleum products, and natural gas processing and liquefaction.
- In 2024, Petronas recorded revenue of MYR 320.0 billion, a YoY decline of 6.9%. Its EBITDA fell 11.3% YoY to MYR 114.1 billion. The company’s performance weakened, primarily due to declining revenue and narrowing profit margins in its downstream energy business. Overall, its operational performance remains fair.
- As of the end of 2024, Petronas’ total debt stood at MYR 110.9 billion, while its total cash reserves reached MYR 188.5 billion, exceeding its total debt and positioning it as a net cash company. Its total debt / EBITDA ratio is low at 1.0 times, reflecting a very healthy leverage level. The interest coverage ratio is impressively high at 24.0 times.
- All three new bonds offer high attractiveness, with guidance yields ranging from 5.3% to 5.6%, surpassing yields of high investment-grade bonds. Investors may consider its five-year bond due to its lower duration risk. However, investors should note that the final issuance price may not align with the guidance yield.
Minimum/Subsequent: USD200,000/USD1,000
Declaration: For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) and the analyst who produced this report holds a NIL position in the abovementioned securities.