09 November 2012 09:18 [Source: ICIS news]
SINGAPORE (ICIS)--Ratings firm Moody’s Investor Service said on Friday it has assigned a first-time issuer rating of “Aa3” for China’s state-owned refining major Sinopec Corp, partly on the firm’s synergies from its integrated petrochemicals and retail marketing businesses.
The “Aa3” rating is a combination of its standalone credit rating of “A3” and a reflection of “the high likelihood of financial support from its parent, Sinopec Group, in times of financial distress”, said Moody's vice president and senior analyst Simon Wong.
Sinopec Corp is the core subsidiary of the Sinopec Group, which is China's largest refiner and petrochemicals producer and the country's second-largest oil and gas producer.
Sinopec Corp's “A3” standalone rating is based on its dominant position in China’s energy and petrochemicals industries, its large oil and gas reserves and production volumes as well as its good access to bank and capital markets, Wong said.
The standalone rating was also based on the firm’s “comparative advantages over its domestic peers in terms of refining scale and efficiency”, he added.
While Sinopec Corp’s rating is constrained by China's evolving pricing mechanism for refined oil products, the high cyclicality of its petrochemical business, and its sizable capital spending in the next three to five years, the company's financial metrics is expected to remain stable, according to Moody’s.
The Chinese firm’s standalone rating is unlikely to be upgraded in the near-term given its high level of capital expenditure, increasing finding and development and production costs, and the financial burden due to its social responsibility to maintain stable oil supply for the country, the ratings agency said.
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