S&P downgrades three Malaysia entities

Standard & Poor's said it downgraded the ratings of three Malaysian government-related entities after similar downgrades on the ratings of Malaysia.

Petroliam Nasional Bhd.'s (Petronas) local-currency rating was downgraded to A from A+ and its Asean scale rating was downgraded to axAA+ from axAAA. The outlook is stable.

Axiata Group Bhd.'s foreign-currency rating was downgraded to BBB from BBB+, local-currency rating to BBB from BBB+, Asean scale rating to axA from axA+ and senior unsecured notes to BBB- from BBB.

Telekom Malaysia Bhd.'s foreign-currency rating of A-, local-currency rating of A-, Asean scale rating of axAA and senior unsecured notes rating of A- were placed on Rating Watch negative.

The agency also said it affirmed Petronas' foreign-currency rating at A- and senior unsecured notes rating at A-.

The downgrades reflect the company's critical role and integral link with the Malaysian government and its sensitivity to government intervention, S&P said.

The agency said it equalized the long-term corporate credit rating on Petronas with the sovereign credit rating on Malaysia.

S&P said it downgraded Axiata to reflect the sovereign local-currency rating action because the ratings on the company factor in a view of extraordinary government support.

Telekom Malaysia is considered to have a strong link and an important role with the government, the agency said.

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