Moody's rates Penerbangan Malaysia notes A3

Moody's Investors Service said it assigned an A3 rating to the $1 billion proposed senior unsecured notes to be issued by Penerbangan Malaysia Bhd., which will be irrevocably and unconditionally guaranteed by the government of Malaysia (A3/stable), which owns the company. The outlook is stable.

Proceeds are expected to be used for refinancing, for the acquisition of aircraft and for general working capital.

The Malaysian government views the national civil aviation industry as strategically important to the nation's domestic transportation system, international trade and tourism, according to the agency, and Penerbangan Malaysia is an important component of the airline industry. It owns most of the fleet of Malaysia Airlines System Bhd.

Furthermore, the domestic operations of Malaysia Airlines are effectively funded by Penerbangan Malaysia, such that related profits or losses are transferred to the latter.

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