Moody's Investors Service has downgraded Petroliam Nasional Bhd's (Petronas) domestic issuer and foreign currency senior unsecured ratings to A2 from A1 as well as changed the outlook to "stable" from "negative".

In a statement today, the global rating agency said the national oil company's credit metrics remain strong but the lower ratings were due to its revised cross-sector methodology.

Moody's published its updated cross-sector methodology, titled "Assessing the Impact of Sovereign Credit Quality on Other Ratings" on June 20.

Moody's senior vice-president Vikas Halan said the close credit linkages between the government of Malaysia (A3 stable) and Petronas cannot, under the revised methodology, support a rating for Petronas that is two notches higher than the Malaysian sovereign.

"The company's ties to the sovereign create a potential for government interference that may have a negative impact on the company's business profile or cash flow," he explained.

However, Halan said, its ratings can be maintained one notch above the sovereign rating due to the company's strong credit metrics, low dependence on the domestic economy (70 per cent of revenue generated through exports and overseas) and superior access to the international capital markets. - Bernama