S&P talks rating action on subsidiaries of Kazakhstan's KazMunayGas
BAKU, Azerbaijan, Mar. 31
By Nargiz Sadikhova - Trend:
S&P Global Ratings agency revised its outlooks on KazTransGas (KTG) and KazTransOil (KTO) to negative from stable and affirmed its ‘BB’ ratings, Trend reports with reference to S&P report.
“The negative outlooks on KTG and its core subsidiary Intergas Central Asia JSC mirror that on KazMunayGas (KMG), since we don’t expect to rate KTG above KMG due to its strategically important status for the group,” the report said.
The agency said that it would lower the rating on KTG if it would lower the rating on its parent, KMG.
“Although currently unlikely, we would downgrade KTG if its stand-alone credit profile (SACP) deteriorates to “b+” with no prospects of recovery. This could result from higher-than-expected investments or dividend payouts, resulting in funds from operations (FFO) to debt remaining below 25 percent for a long time; a significantly weaker operating performance, for example, due to materially lower gas transportation and sales volumes; a material change to KTG group’s structure; or large debt-financed capex,” the report said.
The agency said that it would revise the outlook to stable in case of similar action on the parent.
In turn, the negative outlook mirrors that on KTO’s immediate parent, KMG.
“We will likely downgrade KTO if we lower the rating on KMG. We see limited risks for KTO’s SACP at the moment given that the company has no debt on its balance sheet. All else being equal, KTO’s SACP would need to deteriorate to “b” from “bb+”; currently to trigger a downgrade, which is not our base case. A moderate increase in debt leverage would not lead to downgrade” the report said.
"Although very unlikely in the medium term, a material multiple-notch deterioration of the SACP could lead the agency to review our assessment of the likelihood of support for KTO from the state or parent, and lower the rating.
“We would revise the outlook to stable in case of similar action on the parent,” the report said.
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