Baku, Azerbaijan, Nov. 19
By Aygun Badalova - Trend
Standard & Poor's Ratings Services affirmed its 'BB+' long-term corporate credit rating on Kazakhstan Electricity Grid Operating Co. (KEGOC). The outlook remains negative.
At the same time, S&P affirmed its 'BB+' issue rating on KEGOC's senior unsecured bank loan.
The affirmation reflects the assessment of KEGOC's stand-alone credit profile (SACP) at 'b+' and the view of a "very high" likelihood that KEGOC would receive timely and sufficient extraordinary support from Kazakhstan's government, if needed, S&P said in a report.
"We now assess KEGOC's SACP at 'b+' compared with 'b' previously. This reflects our view of the company's "weak" business risk profile, the improvement of its financial risk profile to "significant," and a negative adjustment for the capital structure," S&P said.
Its reassessment of the company's financial risk profile to "significant" from "aggressive" reflects the view of more predictable revenues and operating cash flows.
The regulator has approved tariffs for the five-year period starting 2016, whereas, previously, the tariff horizon was limited to one year.
S&P therefore considers future operating cash flows to be less volatile and believe that tariff increases partly offset the effect of the tenge's devaluation.
This should allow KEGOC to maintain cash flow and leverage metrics in line with a "significant" financial risk profile, according to S&P criteria.