S&P lowers Kazakh KazMunaiGas ratings; outlook negative

S&P lowers Kazakh KazMunaiGas ratings; outlook negative

Baku, Azerbaijan, Feb.17

By Elena Kosolapova - Trend:Standard & Poor's Ratings Services lowered its long-term corporate credit ratings on Kazakhstan-government-controlled vertically integrated oil company KazMunaiGas (KMG) and core subsidiary KazMunaiGas Exploration Production (KMG EP) to 'BB+' from 'BBB-', the rating agency reported on Feb. 17. The outlook is negative.

At the same time, the agency lowered the Kazakhstan national scale rating to 'kzAA-' from 'kzAA'.

"The rating actions follow the downgrade of Kazakhstan on Feb. 9, 2015. The downgrade reflects KMG's status as a government-related entity with an "extremely high" likelihood of receiving government support if in need. We therefore incorporate four notches of uplift into the long-term rating," S&P said.

KMG is a 100-percent government-owned national oil company with stakes in essentially all of Kazakhstan's oil-related assets and priority access to new assets, which also benefit from vertical integration into pipelines.

S&P views KMG's role in the country's economy as "critical." In its view, if KMG were to default, this would have strong negative implications for the government of Kazakhstan and for other government-related entities in the country. KMG holds stakes in all significant oil operations in Kazakhstan. It is one of the country's largest exporters and taxpayers and has some social mandates such as supplying the local market with fuel at fairly low prices and investing in socially important projects. Still, KMG is responsible for only about 28 percent of the country's oil production (12 percent if only majority-owned operations are included).

The rating agency views KMG's link to the Kazakhstan government as "very strong" because the government and political support have helped KMG obtain attractive financing terms for its investments in the past, including refinery upgrade projects and a number of acquisitions. The government's large liquidity reserves and low debt underpin its ability to support KMG. At the same time, KMG's strong links with the government put pressure on its stand-alone credit profile (SACP) because most of its capital expenditure and acquisitions reflect its role as a national champion in the oil and gas sector, but were financed with company-level debt.

Most of KMG's majority-owned oil production assets are mature and lack growth prospects, its refineries are relatively old, and the company only has minority stakes in the country's most profitable and young oil projects (in TengizChevroil and in Karachaganak), according to S&P. At the same time, KMG's debt is relatively large compared with the size of Kazakhstan's economy. This puts further pressure on the company's credit profile.

The negative outlook on KMG mirrors the outlook on Kazakhstan.

If S&P was to lower its rating on Kazakhstan, it expects to lower the rating on KMG. This is because of the uplift the agency includes in the long-term rating on KMG to reflect the expectation of an "extremely high" likelihood of government support for the company.

The rating on KMG has a substantial margin of safety against any gradual deterioration in the company's stand-alone performance. Pressure on the rating could emerge only if KMG's SACP were to deteriorate to 'ccc+', such as in the event of extremely tight liquidity. However, this is not the base-case scenario.

S&P would likely revise the outlook on KMG to stable following a similar outlook revision the sovereign rating.

Follow the author on Twitter:@E_Kosolapova

Georgian exports of knitwear to Turkey decreases
Georgian exports of knitwear to Turkey decreases
Israeli embassy welcomes scheduled resumption of flights to Georgia
Israeli embassy welcomes scheduled resumption of flights to Georgia
Georgia reports 546 coronavirus cases, 1 456 recoveries, 17 deaths
Georgia reports 546 coronavirus cases, 1 456 recoveries, 17 deaths
Loading Bars
5.2-magnitude quake hits Tajikistan
Deutsche Bank starts probe in relation to engagement with some clients
5 terrorists killed in NW Pakistan
Saudi sovereign fund to double assets in next five years to $1.07 trillion - Crown Prince
Azerbaijan completes repair and construction work on roads of Samukh district
Bahar Azadi gold coin price rebounds in Iran
Iranian Energy Exchange announces products to be on sale on January 25
Weekly review of events in agricultural sector of Azerbaijan
Khazar Consortium opens tender for purchase of cartridges, toners
Georgian exports of knitwear to Turkey decreases
Turkmenistan’s State Concern to sign contract with Chinese company for drilling pipes purchase
Israeli embassy welcomes scheduled resumption of flights to Georgia
Bazargan border reopened after unprecedented snow
Cobalt becomes most produced car in Uzbekistan last year
Turkey registers more than 5 200 new coronavirus cases
Mexican authorities recover 19 bodies, some shot and burned, in remote area
Israel bans international flights to curb coronavirus spread
Bulk of construction work completed in Uzbekistan falls on private sector
Turkey to receive 6.5 million doses of China's vaccine next week
Dutch police arrest alleged Asian drug syndicate kingpin
Georgia reports 546 coronavirus cases, 1 456 recoveries, 17 deaths
Germany ready to assist Kyrgyzstan in implementing green economy policies
President Rouhani: Iran's economic ties entering new phase
UK detects 77 cases of South African COVID variant, nine of Brazilian
Azerbaijan shows footage from Ashaghi Aybasanli village of Fuzuli district (PHOTO/VIDEO)
Implementation of drilling operations continue in Iran's oil fields
China sees fall in new COVID-19 cases amid strict local lockdowns
Iran's NIDC declares number of drilled oil & gas wells
Iran unveils details of exports via Bilasuvar border checkpoint
Uzbekistan to launch charter flights from Russia to Tashkent
Chinese smartphone maker discloses amount invested in opening factories in Turkey
Buy/sell operations at Iran Mercantile Exchange revealed
Georgia's import of tubes, pipes, hollow profiles from Turkey increases
Body of Azerbaijani citizen killed on Turkish ship to be sent to his homeland soon - Azerbaijani Foreign Ministry
Israel to start COVID-19 vaccination for high school students
Iran reveals COVID-19 data for January 24
Azerbaijan confirms 568 more COVID-19 recoveries
Portugal votes for new president at height of pandemic
Expert talks promoting import of electric and hybrid vehicles to Azerbaijan
Turkmennebit opens tender for purchase of various equipment
Azerbaijan shows footage from Jomerd village of Kalbajar district (PHOTO/VIDEO)
Sales of goods at Iran Mercantile Exchange spike
Iran reveals amount of loans issued to manufacturing companies
Georgia increases export of marine mammals, fish fats, oils and their fractions to Turkey
S&P talks about Azerbaijan's GDP growth in 2022-2024
Turkey set to receive second vaccine shipment from China soon
Russia records over 21,100 daily coronavirus cases
Weekly review of Azerbaijani precious metals market
Kazakhstan's exports volume to Georgia increases multifold
Azerbaijan's strategic foreign exchange reserves increase year on year
Iran announces volume of sprat caught in Caspian Sea
Azerbaijan shares footage from Ashaghi Veysalli village of Fuzuli district (PHOTO/VIDEO)
Consumption of steel products in Iran increases
3 injured as blast hits vehicle in Kabul
Weekly review of Azerbaijani currency market
Georgia reveals data on exports of semi-finished products of iron or non-alloy steel to Turkey
Iranian companies join UN CTCN
Kazakhstan’s daily COVID-19 case count stands at 1,584
Weekly review of main events in Azerbaijan's transport sector
UK to quarantine visitors from nations with high COVID-19 risk
China rescues first person from Shandong gold mine: state media
Over 2 mln coronavirus cases registered in Colombia
Israel reports 4,550 new COVID-19 cases, 593,578 in total
Iran's Marun Oil & Gas Production Company manufactures certain equipment
Iran to begin COVID-19 vaccinations in coming weeks: President Rouhani
France registers 23,924 new COVID-19 cases, 230 deaths in one day
Turkmenenergo to sign new contracts with foreign companies
7.0-magnitude quake hits South Shetland Islands: CENC
Turkey reports 5,856 new COVID-19 cases, 2,424,328 in total
After first phone call, UK PM Johnson looks forward to working with Biden
UK records another 33,552 coronavirus cases, 1,348 deaths
WHO reports over 600,000 new daily cases of COVID-19
Azerbaijani, Turkish FMs discuss pirate attack on ship
Top Spanish general resigns over allegations of vaccination queue-jumping
Pirates hijack Turkish ship off coast of Guinea, one person killed
BMB Trade Group and Uzbek Saffron Research Center discuss saffron cultivation and processing
Trend TV shares video report from plundered during Armenian occupation Azerbaijani Zangilan
Belarus, Kazakhstan seek closer cooperation in exchange trade
Management of Azerbaijan's State Oil Company being improved - Decree
New staff of Azerbaijani SOCAR's Supervisory Board approved
Georgia's external merchandise trade down 14.8% in 2020
Turkey halts flights from Brazil due to new COVID-19 variant
Gas pressure in Iran's South Pars gas field projected to decrease
Iran's gas processing potential to increase
Portugal holds presidential election as COVID-19 cases spiral
Italy reports 488 coronavirus deaths and 13,331 new cases
Italy to rethink vaccine roll out if supply problems persist
US broadcaster, journalist Larry King dies aged 87
Russia signs deal with Turkey on vaccine production
Azerbaijani MoD issues footage from Kalbajar district's Gamishli village (PHOTO/VIDEO)
Manat exchange rate against dollar to remain unchanged - Standard & Poor's
Bahar Azadi gold coin price again falling in Iran
Azerbaijan considering issues of regional schools damaged during Karabakh War
Iranian Energy Exchange announces products to be on sale on January 24
State subsidy to increase from 10 to 15 GEL per 50 kg of wheat flour in Georgia
Goods transit via Iran's Bileh Savar on rise
Tax authorities of Kyrgyzstan, Russia discuss launch of joint project
Japan's COVID-19 death toll exceeds 5,000 as total cases surpass 360,000
Indian gov't confirms outbreak of bird flu
Azerbaijani president expresses condolences to Ukranian counterpart
All news