Scope Ratings GmbH (Scope) monitors and reviews its credit ratings on an ongoing basis and at least annually, or every six months in the case of sovereigns, sub-sovereigns and supranational organisations.

Scope performs monitoring reviews to determine whether material changes and/or changes in macroeconomic or financial market conditions could have an impact on the credit ratings. Scope considers all available and relevant information when undertaking the monitoring review.

Monitoring reviews are conducted by performing a peer comparison, benchmarking against the rating-change drivers, and/or reviewing the credit ratings’ performance over time, as deemed appropriate by the Lead Analyst or Analytical Team Head, in addition to an assessment of all aspects of the relevant methodology/ies, including key rating assumptions and model(s). Scope publicly announces the completion of each monitoring review on its website.

Scope completed the monitoring review for MOL PLC KMRP Organisation 2021-1 on 21 November 2022 and considered the reporting up to 14 October 2022. The credit rating remains as follows:

MOL PLC KMRP Organisation 2021-1 Bond (ISIN HU0000361274), HUF 80bn: B+

This monitoring note does not constitute a credit rating action, nor does it indicate the likelihood that Scope will conduct a credit rating action in the short term. Information about the latest credit rating action connected with this monitoring note along with the associated rating history can be found on www.scoperatings.com.

Transaction overview

MOL PLC Special Employee Stock Ownership Programme Organisation 2021-1 of MOL Employees (MOL PLC KMRP Organisation 2021-1) financed the acquisition of a portfolio composed exclusively of (i) MOL Plc. ordinary shares, for an aggregate amount of up to HUF 80bn, and (ii) Hungarian government securities, for an aggregate amount of up to HUF 8bn. The transaction facilitates the financing of an employee-backed investment scheme in MOL according to a dedicated national law (the KMRP or SESOP law) using dedicated vehicles (the KMRPs) where membership is restricted to employees and management of a company: it is expected there will be around 300 participants in aggregate to the two KMRPs set-up by the employees of MOL Plc., including probably 10 members of the Board of Directors. The share in each of the KMRPs held by the 10 members of the Board of Directors of MOL Plc is above 90%.

MFB, the Hungarian Development Bank Pr. Ltd. (MFB), provides a guarantee for the rated bond for 80% of its outstanding notional amount. The guarantee is unconditional, irrevocable and the guarantor will pay on the first written request of the beneficiaries, being the bondholders. Erste Bank Hungary is the account bank and OTP Bank Plc. provides paying agent services.

The different costs of the structure, including interests on the bonds, cost of the guarantee and different fees will be paid out of (i) the interest earned on the government securities, (ii) the dividend paid by the MOL Plc. shares, (iii) a subsidy by MOL Plc. as allowed under the SESOP law, (iv) sale of the government securities or (v) sale of the MOL Plc. shares themselves. The payment of the subsidy is preconditioned on the ordinary dividend being paid on the MOL shares in the respective year.

At or before the maturity date, the assets of the issuer will be liquidated or acquired by the members of MOL PLC KMRP Organisation 2021-1 in order to redeem the rated bonds.

The rated bonds mature in bullet repayment structure on 26 January 2032 and pay 4.95% annually.

Key rating factors

The rated bond benefits from a better-than-expected liquidity coverage and a relatively stable collateral price, which provide a buffer against the adverse unfolding of current macroeconomic and energy market uncertainties.

Credit-positive (+)

Availability of liquidity. The issuer has collected full regular dividends, the full subsidy and a special dividend of about two times the regular dividend. This, together with the increasing interest collections on the government bond investments creates a better-than-expected liquidity position for the issuer and creates a buffer for future payment dates, thanks to the full capturing of excess liquidity.

Unchanged counterparty profiles. The counterparty risk profiles of the involved entities, i.e. MOL Plc., the guarantor MFB and the two bank service agents OTP Bank and Erste Bank Hungary, remain broadly unchanged, supporting the rating of the bond at the current level.

MOL Plc.’s share price stability. The MOL Plc. Stock price is at a similar level as at closing of the transaction and the long-term volatility has remained stable since closing.

Credit-negative (-)

Macroeconomic environment. The current macroeconomic environment with high inflation, rising interest rates, significant energy-price volatility and geopolitical tensions spurs significant uncertainty for MOL Plc.’s stock price and its ability to pay dividends.

The methodologies applicable for the reviewed ratings (General Structured Finance Rating Methodology,17 December 2021; Counterparty Risk Methodology,14 July 2022) are available on https://scoperatings.com/governance-and-policies/rating-governance/methodologies.
This monitoring note is issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0.
Lead analyst Sebastian Dietzsch, Senior Director

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