S&P upgrades Trinidad Petroleum Holdings Ltd

INTERNATIONAL ratings firm Standard and Poors (S&P) Global Ratings has removed its CreditWatch rating on Trinidad Petroleum Holdings Ltd (TPHL) and raised its issuer credit rating on the company by two notches to 'BB' from ‘B+’.

S&P announced the upgrade in statement on Thursday. S&P Global also assigned a a final ‘BB’ issuer credit and issue level rating to Heritage Petroleum Company Ltd, TPHL's main operating subsidiary.

Heritage contributes approximately 87 per cent of TPHL’s total earnings before interest, taxes, depreciation and amortisation (EBITDA) and accounted for about 58 per cent of TT's total oil production in fiscal 2021.

In May 2022, Heritage closed its US$500 million senior secured notes transaction and US$475 million new term loan. This enabled it to refinance TPHL’s debt and implement a comfortable, lower cost and longer-term debt maturity schedule following the refinancing exercise.

S&P said, "These new debt issuances have excluded from any lien reserves, and importantly, property not required for core business operations."

After TPHL refinanced most of its liabilities through Heritage, it no longer has the administrative default that forced it to classify total liabilities as short-term.

S&P Global also withdrew its issue-level ratings on TPHL's 9.75 per cent senior secured notes due 2026 and six per cent senior unsecured senior notes due 2022 after full repayment in the recent refinancing exercise.

In a statement, TPHL and Heritage chairman Michael Quamina said, "We are very pleased with this most recent upgrade."

Referring to increased global oil prices as a result of the ongoing Russian military action in Ukraine and Heritage's plans for increased production, he added, "We look forward to maximising returns for the people of Trinidad and Tobago.”

Energy Minister Stuart Young welcomed the upgrade in TPHL's rating.

"It had been clearly indicated on the last occasion when there was a slight downgrade, that it was temporary once certain issues were addressed."

In February, S&P downgraded TPHL from "B+" to "BB." S&P identified TPHL's failure to report its audited 2019 financial statements on September 30, 2020 and the tight maturity profile of its upcoming debt payments

At that time, TPHL promised both issues would be resolved soon.

Young was pleased that TPHL was able to resolve the matters.

"There is much positive taking place in our energy sector."

Young thanked the workers, management and boards of TPHL and its subsidiaries for their efforts which contributed to the improved ratings by S&P.

"I encourage them to keep improving.”

Former energy minister Kevin Ramnarine also welcomed the improved ratings issued to TPHL by S&P. But he believed this was the result of external rather than internal factors.

"It's expected given high oil prices."

On Thursday, Brent and West Texas Intermediate crude oil were trading at US$118.4 and$117.7 per barrel respectively.