BAKU, Azerbaijan, Nov. 12
By Nargiz Sadikhova - Trend:
Fitch Ratings has revised the Outlook on Kazakhstan’s Astana Gas company (Kazmunaygas company's subsidiary) Long-Term Issuer Default Rating (IDR) to Positive from Stable and affirmed the IDR at 'BB' and National Long-Term Rating at 'A(kaz)', Trend reports with reference to the report.
‘Under Fitch's Government Related Entities (GRE) Criteria, we classify AG as an entity with strong linkage to its ultimate sponsor, the Republic of Kazakhstan, based on state funding, policy support, and indirect full state ownership and control via Sovereign Wealth Fund Samruk-Kazyna JSC and JSC National Management Holding Baiterek.
The agency notes that the revision of the Outlook largely reflects reduced completion risk as the Saryarka pipeline project has entered the final stages of construction and commissioning on time and on budget. Transition to operating phase is expected in 1H2020.
Status, Ownership and Control – Strong.
Support Track Record and Expectations - Very Strong.
Socio-Political Implications – Weak.
“We do not expect any socio-political implications in case of a default. As the project is still in the greenfield phase, a default would not affect provision of any public services, but rather delay gas supply to the capital city Nur-Sultan while current suppliers would cover energy needs,” the report said.
Financial Implications of Default – Moderate.
“The financial implications of a default are limited due to the mostly non-public and local nature of the funding. However, there could be some repercussions because 40 percent of funds are provided by EDB, an international financial institution, which has loaned a total $3.3 billion in 75 projects in Kazakhstan. Thus a default would cause reputational damage, increase the cost of finance to other GREs and decrease availability of funding from other international financial institutions active in Kazakhstan,” the report said.
Fitch has not assigned a Standalone Credit Profile at this stage because of the lack of information on the EPC contractor and due to availability of only preliminary information on revenue framework, operational risk and financial metrics.
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