S&P ups MOL Hungarian, bonds to BB+

S&P said it raised its long-term corporate credit rating on MOL Hungarian Oil and Gas plc to BB+ from BB.

The outlook is stable.

The agency also upgraded its issue rating on MOL's senior unsecured bonds to BB+ from BB.

In addition, S&P withdrew all ratings on subsidiary Magnolia Finance Ltd. as per the issuer's request.

S&P said the upgrade primarily reflects its expectations that MOL's credit metrics will be stronger than anticipated due to the downstream division's better performance.

The agency now forecasts MOL's funds from operations (FFO) to debt, as adjusted by S&P, at 45% on average over 2016-2018, which it sees as commensurate with an intermediate financial risk profile.

S&P also thinks that with reduced capital spending, the company will likely generate positive discretionary cash flows even under the assumption of an industry-wide 30% contraction in refining margins in 2016.

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