Malaysia's Petronas begins US$17b bond and sukuk drive

[KUALA LUMPUR] Malaysian energy company Petronas began roadshows on Thursday to raise up to US$17 billion from conventional and Islamic bonds, or sukuk, for working capital.

State-owned Petronas met potential investors for a US$15 billion multi-currency conventional bond programme and a one-off dollar-denominated sukuk issuance of US$2 billion, two sources told Reuters.

A spokesman from Petronas confirmed the plans.

Bank of America Merrill Lynch, CIMB Group Holdings, Morgan Stanley MUFG, JP Morgan and Citibank are lead arrangers, while HSBC and Deutsche Bank are playing smaller supporting roles, the sources said.

Petronas will conduct roadshows in Kuala Lumpur, Abu Dhabi, Dubai, London, Hong Kong, Boston, Los Angeles and New York from Thursday to March 10, they added.

Ratings agency Standard & Poor's on Thursday assigned a preliminary rating of A- to the Petronas sukuk.

The move by Petronas comes after the company announced its first quarterly loss in at least five years on Feb 27 because of the global slump in oil prices. It stated plans to cut capital expenditure by 10 per cent and operating expenses by up to 30 per cent this year.

Malaysia, a net energy exporter, relies heavily on Petronas for most of its oil and gas revenue. But weaker global oil prices have dented its income and left the Southeast Asian nation with a devalued currency and risk of a sovereign downgrade because of mounting debt from its 1MDB state investment fund.

The company said it will provide RM26 billion (S$9.72 billion) in dividends to the government this year.

REUTERS