Moody’s cuts China National Petroleum BCA to a1

Moody's Investors Service said it affirmed the Aa3 issuer ratings of China National Petroleum Corp. (CNPC), as well as:

• The provisional Aa3 rating of the euro medium-term note program and Aa3 rating of three tranches drawdown under euro medium-term note program launched by CNPC General Capital Ltd. and guaranteed by CNPC; and

• The A1 rating of the bonds issued by CNPC (HK) Overseas Capital Ltd. and CNPC General Capital Ltd. The notes are guaranteed by CNPC Finance (HK) Ltd. (A1 stable) – which is in turn supported by its ultimate parent, CNPC – in the form of Keepwell Agreements.

The outlook on all ratings is stable.

At the same time, the agency lowered CNPC's baseline credit assessment to a1 from aa3 and incorporated a one-notch uplift of government support into its ratings.

The actions follow the sharp reduction in Moody's oil price assumptions in light of continuing oversupply in the global oil markets.

"The change in CNPC's BCA reflects its weakened credit profile due to the sharp drop in the crude oil and natural gas prices. We expect that its credit metrics will continue to deteriorate over the next two years, under our recently revised price assumption for crude oil and natural gas," Kai Hu, Moody's senior vice president and local market analyst for CNPC, said in a news release.

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