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Operating cash flows sufficient to fund capital spending KUALA LUMPUR: Moody’s Investors Service expects Petroliam Nasional Bhd’s (Petronas) credit metrics to stay strong through 2021 to 2022. It said this was based on an adjusted debt/capitalisation at around 22% and earnings before interest and tax/interest expense at eight to 12 times. “Further, the company’s commitment to hold significant cash will protect its credit quality during periods of volatile crude prices, ” it said in a statement. Based on Moody’s medium-term Brent crude oil price assumption of U$45 to US$65 per barrel, Petronas’ operating cash flows will be sufficient to fund its capital spending and regular dividend payments. Moody’s said Petronas will pay RM18bil dividend in 2021 to the Malaysian government (A3 stable) according to the latest budget. “However, requests by the government for higher dividend payments, especially if there is an increase in the government’s funding needs, cannot be ruled out. “In such a scenario, Moody’s expects Petronas to minimise the impact on its financial position by reducing its cash outflows on operations or capital spending, ” it said. Petronas’ reported net cash position fell to RM52bil in 2020 from RM82bil in 2019 because of negative free cash flows […]
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