Statement on Moody’s Investors Service Ratings Action on PETRONAS

Kuala Lumpur, 21 June 2019 - PETRONAS refers to the announcement by Moody’s Investors Service that it has downgraded our credit ratings to A2 (stable) from A1 (negative). The announcement was made subsequent to the publication of its updated cross-sector methodology “Assessing the Impact of Sovereign Credit Quality on Other Ratings” published on 20th June 2019.

Under the new methodology, it is less likely for a company to be rated two notches above sovereign. Based on Moody’s updated assessment, PETRONAS no longer meets one of the characteristics required for a two notch uplift above sovereign (A3 stable). This is due to the Company’s close credit linkages to the Malaysian Government as its sole shareholder and that Moody’s could not rule out the possibility of future high dividend requests. In addition, the ratings action is also influenced by the uncertainty over the negative impact to PETRONAS that may arise from the ongoing deliberation relating to the implementation of Malaysia Agreement of 1963 (MA63).

PETRONAS’ rating of A2 (stable) is now one notch above sovereign on the back of its strong financial metrics, conservative financial policies, solid liquidity profile and significant hydrocarbon reserves.

PETRONAS would like to emphasise that our strong fundamentals remain unchanged. PETRONAS has consistently maintained a conservative financial policy and healthy net cash balance that enables the Company to withstand volatility and shocks in the market. This is demonstrated by PETRONAS’ recent financial results in the first quarter of 2019 and full year 2018, which was supported by our continuous efforts to increase operational efficiency and commercial excellence.