Fitch updates Kazakhstan's QazaqGaz ratings

Kazakhstan Materials 15 February 2023 10:46 (UTC +04:00)
Emin Sevdimaliyev
Emin Sevdimaliyev
Read more

BAKU, Azerbaijan, February 14. Fitch Ratings affirmed the long-term foreign and local currency Issuer Default Ratings (IDRs) of the Kazakh national gas company QazaqGaz, and its fully owned subsidiaries, Intergas Central Asia JSC (ICA) and KazTransGas Aimak JSC (KTGA) at “BBB-” with a stable outlook, Trend reports, citing Fitch.

The rating agency considers the strong links of QazaqGaz with the country in its assessment of the national company. Fitch states that the strong link will be maintained despite the intention of the government to sell up to 25 percent of its share in the company.

Additionally, the government is expected to have a high interest to support the company because of the socio-political implications. The company employs around 12,000 people and provides gas supply to over 50 percent of Kazakh citizens, which makes it likely that the government will intervene should unfavorable economic conditions arise.

Fitch predicts the scope of work of QazaqGaz to increase in the future. Due to the increasing domestic gas demand the national gas company is expected to reduce highly profitable gas exports to China, and, moreover, the company may need to purchase gas from Russia. These changes mean that the earnings of QazaqGaz will moderate.

Fitch estimates Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of the national company to amount to 100 billion Kazakh tenge ($222.13 million) in 2025, compared to 240 billion Kazakh tenge ($453.14 million) in 2021.

Finally, ICA's and KTGA's 'BBB-' ratings reflect an unchanged strong linkage between QazaqGaz and its wholly owned subsidiaries, hence warranting the equalization of their ratings.

Fitch Ratings Inc. is an American credit rating agency and is one of the most reputable global rating agencies. The agency aims to provide business intelligence to facilitate the effectiveness of decision-making and decrease the business risks for its clients.