Fitch affirms MOL ratings

Fitch Ratings on Monday affirmed Hungarian oil and gas company MOL’s Long-term foreign and local currency Issuer Default Ratings (IDR) at ‘BBB-’ with Stable Outlooks and Short-term foreign and local currency IDRs at ‘F3’.

Fitch also affirmed MOL’s senior unsecured debt’s foreign and local currency ratings at ‘BBB-’, including its EUR750m 2015 bond and EUR750m 2017 bond.

"The rating affirmation reflects MOL’s improved credit metrics in 2010-2011 in line with the

agency’s expectations," Fitch said. "Following the acquisition of Croatia’s INA...in 2008, the company has focused on organic growth, cost reduction and efficiency improvements across the MOL group, in particular at INA," it added.

"The Stable Outlook incorporates MOL’s plan to fully finance capex from operating cash flow in 2012-2013, which supports the company’s credit profile. Fitch assumes that MOL’s management will continue its prudent financial risk policy and will reduce capital expenditure in case of weaker-than-projected cash flow, for example in case of a worsening situation in its Syrian upstream operations," Fitch said.

Fitch called the situation in Syria "unsettled", adding that a prolonged deterioration of cash flow from the country would be negative for the ratings.

MOL’s ratings and Outlooks were not affected by Fitch’s revision of Hungary’s Outlooks on its Long-term foreign and local currency IDRs (‘BBB-’ and ‘BBB’, respectively) to Negative from Stable on November 11, 2011, the ratings agency said.