Azerbaijan, Baku, Sept. 3 / Trend E.Kosolapova /
Fitch Ratings has affirmed Kazakhstan-based KazTransGas's (KTG) Long-term foreign and local currency Issuer Default Ratings (IDRs) at 'BB+' and Short-term IDR at 'B'.
The Outlooks on the Long-term IDRs are Stable.
The agency has simultaneously affirmed JSC Intergas Central Asia's (ICA) Long-term foreign and local currency IDRs at 'BB+', senior unsecured rating at 'BB+' and Short-term IDR at 'B'.
The Outlooks on the Long-term IDRs are Stable.
Fitch has also withdrawn the senior unsecured rating for the notes issued by Intergas Finance B.V., a Netherlands incorporated special purpose entity that redeemed its USD250m 6.875% notes in 2011 and substituted the issuer of its USD600m 6.375% notes due 2017 to ICA on 11 November 2011.
The ratings of KTG and its 100% subsidiary ICA reflect ICA's position as the monopoly operator of the 11,000km gas pipeline network in Kazakhstan, which currently remains the only transit route for Central Asian gas to Russia and further to Europe.
Fitch views as manageable the planned KTG/ICA capex plans to upgrade the existing ageing gas network and provide gas to several Kazakh regions. Over the past three years, KTG and ICA covered their investment needs from own cash flows. KTG is also involved with two pipeline projects - the 10 bcm Beineu-Bozoy-Shymkent pipeline and the Line C of the Asian Gas Pipeline from Central Asia to China to upgrade capacity to 55 bcm, up from 30 bcm that the already commissioned Lines A and B provide.
Fitch does not expect any material impact on KTG's credit metrics from these projects, which are undertaken and financed by its JVs with China National Petroleum Corporation (CNPC, 'A+'/Stable) and guaranteed by CNPC and/or NC KMG.
KTG's and ICA's credit metrics benefit from solid cash flow generation, positive free cash flow and improved leverage ratios in 2010-2011. KTG's total lease-adjusted debt declined to KZT103.4bn at year-end 2011, or 1.3x EBITDAR and net adjusted debt stood at 0.2x of EBITDAR at 31 December 2011. ICA's gross and net lease-adjusted debt was 1.9x and 1.3x EBITDAR respectively.
Fitch forecasts that ICA/KTG's financial profile will be stable over the medium term, with KTG's FFO gross adjusted leverage remaining in the 1.5x-1.7x range in 2012-2015 and ICA's FFO gross adjusted leverage around 2.2x over the same period.
The group effectively mitigates FX risk as it matches its USD-denominated revenues from gas transit and export gas sales with USD-denominated borrowings.
Fitch views KTG/ICA's liquidity as adequate. Debt repayment schedules are well balanced with a repayment peak in 2017 when ICA's remaining USD540m Eurobonds fall due. At 30 June 2012, KTG had KZT65.5bn in cash and cash equivalents and KZT12.3bn in short-term deposits that were more than sufficient to cover short-term debt maturities of KZT9bn.