Rating action

Scope Ratings GmbH (Scope) has performed the following rating action after completing a monitoring review on the bond issued by MOL PLC KMRP Organisation 2021-2:

MOL PLC KMRP Organisation 2021-2 Bond (ISIN HU0000361290), HUF 80bn: upgraded to BB+ from BB

Transaction overview

The transaction financed the acquisition of a portfolio composed exclusively of (i) MOL Plc. ordinary shares, for an aggregate amount of 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, with the majority owned by the Board of Directors of MOL Plc.

The bond is guaranteed by MFB, the Hungarian Development Bank Pr. Ltd. (MFB), 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 bond, 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 subsidy of 2.5% of the held MOL shares p.a. will be paid to the issuer annually under the precondition that a dividend will be 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 2021-2 in order to redeem the rated bond.

The rated bond matures in bullet repayment structure on 26 January 2032 and pays fixed 4.95% annually.

Rating rationale

The rating assigned to the bond reflects the base case quantitative results. Counterparty risk is immaterial, relative to the assigned rating levels. None of the key drivers of the credit rating action are considered an ESG factor.

Key rating drivers:

• The transaction’s key rating drivers are aligned with those in Scope’s last rating action on the issue dated 25 October 2023.
   
• The liquidity buffer available to the issuer has substantially increased and could now cover all liability costs of the issuer until maturity. Additionally, the liquidity buffer provides excess funds to repay the bond at maturity.^1,2

Key analytical assumptions:

• Dividend yield on MOL Plc common stock plus 2.5% subsidy: 6.1%
   
• Dividend payment frequency: every second year
   
• Stock price volatility 35%
   
• MOL Plc. common stock price HUF 3,030
   
• MOL PLC’s credit quality at BBB-

The analytical assumptions factor in the historical performance of assets of similar nature to those of the assets backing the rated bond, considering available historic performance data or peer transaction benchmarks. They may also reflect qualitative judgments based on various factors, including a) the MOL Plc dividend policy, b) Scope´s macroeconomic expectations, and c) the credit committee´s asset class outlook over the transaction´s lifetime.

Details on these assumptions and other parameters are provided under the section ‘Quantitative analysis’ below.

Key data sources:

• Annual reporting of the issuer.
   
• Share price and dividend publications of MOL Plc.

Rating-Change Drivers

A change to the levels or parameters of the transaction’s key analytical assumptions based on observed performance or new data sources, significant changes to the transaction’s collateral and structural features, and a change in Scope’s credit views regarding the transaction’s key rating drivers could impact the ratings.

The sensitivity analysis below provides an indication of the resilience of the credit rating(s) against deviations in key analytical assumptions.

Sensitivity analysis

This analysis is solely intended to illustrate the sensitivity of the credit rating to the assumed parameters and, all else being equal, is not reflect expected or likely scenarios.

The following shows how the quantitative results change when: i) the MOL Plc. shares volatility assumption is 50%, ii) the stock price drops by 50% immediately, iii) the current liquidity buffer drops by 50%, or iv) a one notch decline in MOL PLC’s credit quality:

• sensitivity to volatility, zero notches;
   
• sensitivity to stock price drop, zero notches;
   
• sensitivity to liquidity buffer drop, three notches;
   
• sensitivity to a one notch decline in MOL PLC’s credit quality, one notch.

Quantitative analysis

Scope has performed a cash flow analysis considering the asset characteristics and the main structural features. Our quantitative analysis reflects the transaction’s strong reliance on both the guarantee, the dividend payments, and the final value of the shares. We derived the bond’s loss rate distribution from a Monte Carlo simulation of the entire structure, incorporating both revenues and costs of the issuer.

One key parameter assumption is the volatility to be assumed for our diffusion of the value of shares, where share’s returns do follow a normal distribution, in a similar fashion as in the Black & Scholes model. We looked at historical volatilities either on MOL Plc. itself or on peer companies (either the largest European Oil & Gas companies, or even more comparable CEE peers) over different horizons: one day, one year, or ten years (duration of the transaction). Several levels of volatilities were tested but the assumption corresponding to the assigned rating is 35%, a level which is in line with short-term historical volatilities. The dividend yield assumed for the duration of the transaction has been defined as a discounted yield corresponding to 50% of the sum of the expected dividend yield plus subsidy as derived from equity analysts’ consensus, which should address the exposure of the transaction to a potential non-payment of dividends in some years.

Rating driver references
1. KMRP 2024 reporting 
2. MOL Group investor relations – stock and dividend information 

Stress testing
Stress testing was performed by applying Credit-Rating-adjusted volatility and dividend yield assumptions.

Cash flow analysis
Scope Ratings performed a cash flow analysis of the transaction with the use of a bespoke tool checked by a dedicated team, taking into account the transaction’s main structural features. The outcome of the analysis is an expected loss and an expected weighted average life for the bonds.

Methodology
The methodologies used for this Credit Rating (General Structured Finance Rating Methodology, 13 February 2025; Counterparty Risk Methodology, 30 June 2025), are available on https://scoperatings.com/governance-and-policies/rating-governance/methodologies.
Information on the meaning of each Credit Rating category, including definitions of default, recoveries, Outlooks and Under Review, can be viewed in ‘Rating Definitions – Credit Ratings, Ancillary and Other Services’, published on https://www.scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Historical default rates of the entities rated by Scope Ratings can be viewed in the Credit Rating performance report at https://scoperatings.com/governance-and-policies/regulatory/eu-regulation. Also refer to the central platform (CEREP) of the European Securities and Markets Authority (ESMA): http://cerep.esma.europa.eu/cerep-web/statistics/defaults.xhtml. A comprehensive clarification of Scope Ratings’ definitions of default and Credit Rating notations can be found at https://www.scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Guidance and information on how environmental, social or governance factors (ESG factors) are incorporated into the Credit Rating can be found in the respective sections of the methodologies or guidance documents provided on https://scoperatings.com/governance-and-policies/rating-governance/methodologies.

Solicitation, key sources and quality of information
The Rated Entity and/or its Related Third Parties participated in the Credit Rating process.
The following substantially material sources of information were used to prepare the Credit Rating: public domain, the Rated Entity, the Rated Entities’ Related Third Parties, third parties and Scope Ratings’ internal sources.
Scope Ratings considers the quality of information available to Scope Ratings on the Rated Entity or instrument to be satisfactory. The information and data supporting the Credit Rating originate from sources Scope Ratings considers to be reliable and accurate. Scope Ratings does not, however, independently verify the reliability and accuracy of the information and data.
Scope Ratings has not received a third-party asset due diligence assessment/asset audit. Scope Ratings has performed its own analysis of the data quality, based on information received from the Rated Entity or Related Third Parties, which is not and should be not deemed equivalent to the performance of due diligence or an audit. The internal analysis was considered when preparing the Credit Rating and it has no impact on the Credit Rating.
Prior to the issuance of the Credit Rating action, the Rated Entity was given the opportunity to review the Credit Rating and the principal grounds on which the Credit Rating are based. Following that review, the Credit Rating was not amended before being issued.

Regulatory disclosures
The Credit Rating is issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0. The Credit Rating is UK-endorsed.
Lead analyst: Sebastian Dietzsch, Senior Director
Person responsible for approval of the Credit Rating: Antonio Casado, Managing Director
The final Credit Rating was first released by Scope Ratings on 20 January 2022. The Credit Rating was last updated on 25 October 2023.

Potential conflicts
See www.scoperatings.com under Governance & Policies/Regulatory for a list of potential conflicts of interest disclosures related to the issuance of Credit Ratings, as well as a list of Ancillary Services and certain non-Credit Rating Agency services provided to Rated Entities and/or Related Third Parties.

Conditions of use / exclusion of liability
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