Moody’s raises PKN Orlen, bonds

Moody's Investors Service said it upgraded Polski Koncern Naftowy Orlen SA (PKN Orlen)’s issuer rating to Baa2 from Baa3 and baseline credit assessment (bca) to baa3 from ba1.

Concurrently, the agency upgraded the rating of the €500 million due 2021 and €750 million due 2023 senior unsecured bonds to Baa2 from Baa3 issued by Orlen Capital AB (publ) and guaranteed by PKN Orlen.

The outlook remains stable.

Moody’s said the upgrade of the bca to baa3 from ba1 reflects the strong improvement in the financial profile in 2015-16 with adjusted EBITDA rising from 3.8 billion Polizh zloty ($970 million) in 2014 to 8.7 billion Polizh zloty ($2.2 billion) in 2016 coupled with reduction in debt, mainly due to closing of the strategic reserves transaction in 2015, resulting in adjusted debt/EBITDA falling to 1.1 times in 2016 from 4.5 times in 2014.

This improvement was mainly due to the combination of supportive macroeconomic environment, benefit derived from Brent-Ural differential, increase in sales volumes and FX effects, the agency explained.

In addition, refining margins peaked at 8.2 in 2015 from 3.4 in 2014 and normalized to 5.3 in 2016.

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