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Malaysia's Petronas says US$5b bond issue for capex, possible M&As
[KUALA LUMPUR] Malaysia's Petroliam Nasional Bhd (Petronas) plans to use the US$5 billion it raised in Asia's largest bond offering so far this year for corporate expenses as well as possible acquisitions, the company said.
In a statement to Reuters, the state-owned energy firm, which posted its first quarterly loss in at least five years in the fourth quarter due to the slump in global oil prices, declined to give any details about its potential M&A plans.
It had earlier stated plans to cut capital expenditure by 10 per cent and operating expenses by up to 30 per cent this year, but still went ahead with the bond and sukuk issue, its first foray into the debt market in six years.
The US$5 billion issue comes as the cost of insuring Malaysian sovereign debt has risen the most this year compared to its Southeast Asian peers on concerns about state investor 1MDB's US$11 billion debt burden.
Weak oil prices have also deepened worries about the revenue prospects for Petronas, which contributes about a fifth of the government's overall income.
The Petronas bond issue was part of an open-ended US$17 billion bond and sukuk programme announced by the company this month, after 1MDB's financing woes put pressure on Malaysia's sovereign rating and weakened the ringgit.
"The proceeds raised from the bond offering, including the sukuk proceeds, will be used for general corporate purposes, including capital expenditure," the company statement said.
Petronas said it was keen to maintain a "comfortable cash balance... to enable us to proceed with important projects and pursue synergistic mergers and acquisitions strategies." It gave no details.
Petronas has for the last three years bought several overseas assets to shore up future earnings as output slows at home. In 2012, it acquired Canada's Progress Energy Resources in a US$5 billion deal that gave it shale gas properties in northeastern British Columbia.
Petronas' cash holdings amounted to US$39 billion, while total borrowings amounted to US$9.9 billion as at end 2014, according to its financial statement.