Rating Action: Moody's reviews Petrotrin's B1 ratings for downgrade

 

• Moody's Investors Service (Moody's) placed Petroleum Co. of Trinidad & Tobago's (Petrotrin) B1 corporate family rating and senior unsecured debt ratings on review for downgrade. This rating action was based on the lack of clarity regarding Petrotrin's new business profile and strategy as well as increasing liquidity risk related to the approaching maturity of the 2019 bonds. Outlook, was also changed to ‘Rating Under Review From Stable’ 

• Petrotrin has a weak financial condition, reflected in its high adjusted debt leverage of 6.2 times and low adjusted interest coverage of 2 times in March 2018. In addition, the government recently announced that it will close Petrotrin's refinery and the company will focus on its upstream exploration and production business. Petrotrin's new business profile and strategy is still unclear, which put to question its medium-term financial prospects. In 2017, the company's oil and gas production was 49,084 boe, which is considered small in the universe of exploration and production companies. 

• Petrotrin also faces increased liquidity risk related to $850 million in global bonds that mature in August 2019. Petrotrin's total adjusted debt in March 2018 amounted to close to $2 billion, out of which about $600 million was short term debt. Although Moody's believes that the level of implicit government support to the stateowned company has not changed and continues to be very high, Petrotrin's weak financial condition and liquidity, combined with uncertainties regarding the viability of its business transformation, raise questions about its intrinsic credit profile. 

Source: Moody’s Investors Service