Fitch forecasts moderate dividends from Kazakhstan's KazMunayGas' equity affiliates

Fitch forecasts moderate dividends from Kazakhstan's KazMunayGas' equity affiliates

BAKU, Azerbaijan, Sept.24

By Nargiz Sadikhova - Trend:

Fitch Ratings has assigned National Company KazMunayGas's JSC (KMG) proposed Eurobonds an expected senior unsecured 'BBB-(EXP)' rating, Trend reports with reference to the Fitch.

Its Long-Term Issuer Default Rating (IDR) has been affirmed at 'BBB-' with a Stable Outlook.

The new bond will rank pari passu with senior unsecured debt. The proceeds from the bonds will re-finance Eurobonds due in 2022 and 2023. The final rating is contingent upon receipt of final documentation confirming the information already received and detail regarding the amount and tenor of bonds.

“We forecast an increase in funds from operations (FFO) net leverage to 5.8 times in 2020 from 2.3 times in 2019 due to the effects of the COVID-19 pandemic and a price war in the oil market. Based on our price deck we expect a sharp recovery from 2021, which we expect will have a positive impact on cash generation and leverage,” the Fitch said.

Fitch assesses NC KMG's Standalone Credit Profile (SCP) at 'bb-' but the deterioration in credit metrics in 2020 and a lack of deleveraging from 2021 may result in a downward revision of the SCP.

Impact of KTG Transfer Uncertain as in June 2020 NC KMG proposed the transfer of JSC KazTransGas (KTG) to be directly under JSC Sovereign Wealth Fund Samruk-Kazyna (Samruk-Kazyna; BBB/Stable) management.

Fitch projects NC KMG's FFO leverage to average 4.6x on a gross basis and 3.4x on a net basis in 2021-2023.

Kashagan Stake Buyback Timing Uncertain: NC KMG has a call option with Samruk-Kazyna to buy back the former's stake in the giant Kashagan oilfield (KMG Kashagan B.V.) until 2022. However, the stake in Kashagan is currently frozen by a Dutch court under arbitration, which makes the timing uncertain.

“The 8.44 percent stake was purchased by Samruk-Kazyna for USD4.7 billion, of which a $2.7 billion-equivalent was provided as a local-currency debt, in 2015 to provide NC KMG headroom under its debt covenants. We view this call extension as an example of state support to NC KMG and expect flexibility in the future,” the report said.

Mega Projects to Boost Volumes: NC KMG has stakes in the three internationally developed giant upstream projects in Kazakhstan: Tengiz, Karachaganak, and Kashagan.

“Muted Outlook for Dividend Inflow: We forecast moderate dividends from NC KMG's equity affiliates in 2020-2023. This is lower than our previous forecast and far lower than the $2.4 billion per annum in 2012-2014, ie before the oil price collapse,” the report said.

“We expect no dividends from Kashagan in 2020-2022 as KMG Kashagan B.V., KMG's 50 percent associate with a 16.88 percent interest in the project, will use its FCF to repay an approximately $1.5 billion long-term oil prepayment that we view as debt. We estimate that dividends received by NC KMG should grow significantly around 2022-2023, due to higher payments from TCO unless oil prices remain low,” the Fitch said.


Follow the author on Twitter: @nargiz_sadikh

Subscribe to Trend in Google News! Subscribe
Russian peacekeepers - guarantors of peace in Karabakh - President Putin
Russian peacekeepers - guarantors of peace in Karabakh - President Putin
Azerbaijani Prosecutor's Office opens criminal case on civilian's mine accident in Aghdam
Azerbaijani Prosecutor's Office opens criminal case on civilian's mine accident in Aghdam
Russia calls for prompt launch of delimitation process of Armenian-Azerbaijani border - MFA
Russia calls for prompt launch of delimitation process of Armenian-Azerbaijani border - MFA
Loading Bars
Merck raises full-year profit target after cancer drug sales help Q3 beat
Nar supports publication of book on veteran teachers
Renesas buys Israeli Wi-Fi chipmaker Celeno for $315m
Turkey receives positive signals from Armenia – Turkish defense minister
Indian forex reserves surge by $58.38 bn in H1
Qatar targets 25% cut in greenhouse gas emissions by 2030 under climate plan
Kazakhstan's economy to grow faster than in other EAEU states - EDB expectations
Georgia to keeps tight monetary policy – NBG
India, Sri Lanka and Maldives hold joint exercise on maritime security
Kazakhstan boosts manufacturing volume of gold
Indian Govt looks to revive tourism sector as jab drive gathers steam
Canadian company to invest in exploration of gold deposits in Uzbekistan
Turkish company talks plans for crop, livestock production in Azerbaijan's Karabakh
21 subject olympiad winners enter Baku Higher Oil School
IRENEX shares data on sales of Iran’s NIOPDC at energy exchange
Bahar Azadi gold coin price again falling in Iran
Azerbaijan’s 9M2021 imports of Turkish chemical products increase
Kazakhstan to build capacious renewable energy facilities
PM Modi reaffirms India’s focus on free & open Indo-Pacific
Iran reveals COVID-19 data for October 28
Chief Financial Officer of Azerbaijan's Bravo supermarket chain talks profit prospects
Pension savings in Kazakhstan increase
Iran's Bistoon TPP boosts electricity generation
Romania plays very important role in Azerbaijan-NATO cooperation plan - Azerbaijani president
Konkan Shakti 2021: India, UK take part in maiden bilateral tri-service exercise
Georgian public foreign debt on the rise
During second Karabakh war, we felt support of people of Kyrgyzstan - President Ilham Aliyev
Turkey occupies very important place in international arena - Azerbaijani President
EBRD talks details of putting out former uranium mining sites in Uzbekistan
Indian-origin Anita Anand is Canada's new Defence Minister as PM Trudeau reshuffles Cabinet
Kazakhstan reports decrease in volume of money transfers
Azerbaijan's Barda city commemorates victims of Armenian aggression during second Karabakh war (PHOTO)
Russia’s Gazprombank projects Azerbaijan’s refinancing rate level
Iran’s Shahid Tondgooyan Petrochemical Company reaches increase in production
Armenia ready to begin delimitation and demarcation of borders with Azerbaijan
Azerbaijani President congratulates Turkish counterpart
Saipem announces time of returning EBITDA to pre-COVID level
Iran shares amount of needed money for construction of roads, bridges in Khuzestan Province
Iran reveals volume of trade turnover via border terminals in Sistan & Baluchestan Province
Saipem reveals revenue forecasts for 2H 2021
Turkey acting jointly with Azerbaijan regarding normalization of relations with Armenia - FM
Saipem sees significant increase in revenues
Turkey reveals number of ships docking at Tekirdag port in 9M2021
Armenia lagged behind Azerbaijan in armaments issue – Armenian president
Azerbaijan talks ongoing work to restore houses damaged from Armenian shelling during Second Karabakh War - Trend TV (PHOTO)
Ryanair vows 5-day refund turnaround after COVID criticism
Hungary talks on measures to diversify gas supply routes
Hungary’s gas reservoirs 86% full, well above EU average
Investment projects in Turkmen oil and gas fields in Caspian Sea discussed at int'l conference
BSTDB ready to support Azerbaijan to meet emission commitments under Paris agreement (Exclusive)
Bank Keshavarzi Iran sees increase in loans issued for purchase of agricultural machinery
SOCAR’s STAR Refinery boosts crude imports
Turkmenistan Airlines simplifies clearance of int’l cargo transportation
Turkmenistan, Danish Haldor Topsoe to co-op in ammonia, methanol production
Azerbaijan sees significant growth in investment in capital market
Iran increases exports through Bilasuvar border checkpoint
Remains of two people found in Azerbaijan's liberated Aghdam - Prosecutor General's Office
Azerbaijan to discuss change of state duties
Iran announces amount of currency sold at NIMA exchange rate
Kazakh gas producing company opens tender to attract designing services
Iran allocates financial aid to support maritime industries
President Ilham Aliyev receives credentials of incoming Romanian ambassador (PHOTO/VIDEO)
President Ilham Aliyev receives newly appointed ambassador of Kyrgyz Republic (PHOTO/VIDEO)
Baku Stock Exchange talks readiness to issue "Green Bonds" for Azerbaijan's liberated lands
Israel 2021-22 budget clears parliament's finance committee
Kazakh banks increase lending value m-o-m
Iran builds prefabricated homes in Kish Island
Azerbaijan's Bravo auctions its first bonds via Baku Stock Exchange (PHOTO)
Azerbaijan completes repairs of houses in Jojug Marjanli damaged by Armenia’s shelling (PHOTO)
Azerbaijani oil prices decline
Georgia releases data on COVID-19 cases for October 28
Iran's Astara port , Russia's Astrakhan port declared sister ports
Kazakhstan reports increase in all types of deposits
Kazakhstan to consider construction of reservoirs in Kyzylorda region
Kazakhstan doesn’t plan to suspend scheduled flights – ministry
Iran reactivates fuel stations after cyberattack
Azerbaijan betters positions in revised Global Firepower 2021 rating
Iranian currency rates for October 28
Booster jab is important for long-term protection against COVID-19 - Azerbaijani doctor
National Iranian Oil Company discloses volume of gas to be extracted in country
SOCAR Ukraine sees 11% increase in fuel sales
Iran and Turkmenistan sign cooperation document
Iran's export to Kazakhstan increases
Azerbaijani boxers start performance in World Cup in Belgrade with victory
Azerbaijan repatriates 38 children from Iraqi orphanages – MFA
Turkey unveils number of ships docking at Antalya port
Iran's Energy Exchange announces products to be on sale on October 30
Brent falls to two-week low after inventory shock
Vienna talks to be resumed in late Nov.: Ulyanov
Georgia increases re-exports of vehicles
Coronavirus caseload in Kazakhstan climbs to 934,387
Iran prepares to boost maritime transit
Biden likely to head to COP26 without a final U.S. climate deal
6 companies to recall nearly 330,000 vehicles over faulty parts in South Korea
India rejects net zero carbon emissions target, says pathway more important
Australia eases COVID-19 travel advisory ahead of border reopening
Barcelona sack coach Koeman after loss to Rayo Vallecano
US, Turkey hold new talks to 'resolve F-35 dispute'
EU top court fines Poland 1 mln euros per day amid legal row
Turkey reports 26,896 daily COVID-19 cases
All news