Fitch affirms MOL

Fitch Ratings said it affirmed MOL Hungarian Oil and Gas Co. plc's long-term foreign- and local-currency issuer default ratings at BBB- with stable outlooks, its short-term foreign- and local-currency issuer default ratings at F3 and the foreign- and local-currency ratings on the company's senior debt, including its €750 million 2015 bond and €750 million 2017 bond, at BBB-.

The rating action follows the company's announcement that it will make a purchase offer to the minority shareholders of Croatian subsidiary INA - Industrija Nafte dd Zagreb. MOL would have to pay about €300 million for the entire 8% stake. Fitch estimates that this acquisition would increase MOL's leverage by up to 0.2 times. Leverage was 2 times at the end of September.

In the agency's view, MOL has limited rating headroom as a result of this upcoming transaction and various recent decisions of the Hungarian government, so any additional acquisitions pursued by the company or any additional decisions of the Hungarian government that substantially reduce MOL's cash flows are likely to put negative pressure on the rating.

The ratings balance MOL's leading and sustainable position in central and southeastern Europe, solid cash flow per barrel and high-quality, favorably positioned refining assets in Hungary and Slovakia against the cyclicality and capital intensity of its exploration and production and refining and marketing segments, Fitch said.

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