S&P rates Hungarian Oil and Gas bonds BBB-

Standard & Poor's said it assigned its BBB- credit rating to the proposed senior unsecured euro-denominated bonds to be issued by Hungary-based Magyar Olaj- es Gazipari Rt. (MOL; BBB-/stable/--).

The entity issuing the proposed bond, MOL Hungarian Oil and Gas plc, is the parent entity in the MOL Group. Almost all group consolidated debt (currently mainly bank debt) is located at the parent company, which is an operating entity.

According to MOL Hungarian Oil and Gas on its web site, BNP Paribas and Dresdner Kleinwort Wasserstein have been appointed as joint lead managers for the debut eurobond transaction.

S&P said the net proceeds from the issue of notes will be applied for general corporate purposes and the rationalization of its existing portfolio of debt.

The proposed notes are unsecured obligations of the issuer and will rank pari passu with all current and future unsecured and unsubordinated obligations of the issuer. The covenant package includes adequate negative pledge wording (limiting, for example, future mortgages, charges, liens). It also contains a cross-default for all material subsidiaries, defined as those representing more than 10% of consolidated EBITDA or net tangible worth, with a threshold of €50 million.

No change of ownership clause is included in the proposed notes. This is, however, not of major concern in light of the high share of international and domestic investors, S&P said.

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