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Message: Hungary's MOL seen seeking loan
Hungary's MOL seen seeking loan - paper
Wednesday, August 26, 2009 08:48:00 AM
Hungary's oil and gas group MOL is in talks with several banks about taking out a loan, local business daily Napi Gazdaság reported on Wednesday. Via the discussions the company is testing the conditions on which it could gain access to market-based funding. Bond issuance is another option.
MOL is under no pressure to borrow. It has slashed its capital expenditures by 35% this year, which means the only source of its investment projects is its cash flow. Additionally, there is a cost cutting scheme in progress, which is planned save the group USD 80-100 m.
Although the group's debt ratios rose to a new high in the first quarter of 2009, the prime reason for that was the forint's weakening, given that MOL's FX-denominated debt corresponds to about 95% of its total debt.
However, as the HUF firmed in Q2, MOL's debt ratios will also decrease. For the time being this process seems to be continuing in Q3 as well, although end-quarter closing rates will be crucial in this regard.
Although the group's debt ratios rose to a new high in the first quarter of 2009, the prime reason for that was the forint's weakening, given that MOL's FX-denominated debt corresponds to about 95% of its total debt.
However, as the HUF firmed in Q2, MOL's debt ratios will also decrease. For the time being this process seems to be continuing in Q3 as well, although end-quarter closing rates will be crucial in this regard.
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