Mol Drops to 16-Month Low on S&P Rating Warning: Budapest Mover

Mol Nyrt. tumbled to the lowest level in more than 16 months after Standard and Poor’s said it may cut the credit rating of Hungary’s largest refiner if the company fails to retain its stake in a Croatian unit.

The stock fell 1.5 percent to 15,160 forint by the close in Budapest, the weakest level since May 2012. The company’s BB+ rating may be downgraded one notch to match Hungary’s as disposal or reduction of the INA Industrija Nafte DD holding could expose Mol to the nation’s “weak” economy, S&P said in an e-mailed statement.

Shares of Budapest-based Mol have slumped more than 5 percent since Croatia issued an arrest warrant against Chairman Zsolt Hernadi on Oct. 1 as part of a bribery probe into the 2009 deal that gave the refiner control of INA. Mol, which owns 49.1 percent of the company headquartered in Zagreb, is in talks with the Croatian government over management rights in the unit.

“Uncertainties justify S&P’s opinion,” Peter Szentirmai, a Budapest-based analyst at KBC Securities, said in an e-mail. “Given pending negotiations with Croatia, we continue to believe that Mol’s share price could remain under pressure.”

INA produced 38 percent of Mol’s hydrocarbon output in the first half, according to an earnings report. The Hungarian company’s shares have retreated almost 10 percent in the past three months, the steepest decline among 16 eastern European energy companies tracked by Bloomberg. INA has the second-worst showing with a drop of 6.9 percent.

Hungary lost its investment grade credit rating in 2011 after the government nationalized private pension fund assets and levied retroactive industry taxes in an effort to shore up public finances. The Cabinet forecasts economic growth of 0.7 percent this year after a contraction of 1.7 percent in 2012.

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