ASTANA, Kazakhstan, November 29. Moody's Investors Service (Moody's) has changed the outlook to positive from stable and affirmed the Baa2 long-term issuer ratings of Kazakhstan Electricity Grid Operating Company (KEGOC), Trend reports.
The rating action reflects an improvement in KEGOC's standalone assessment, which Moody's views to have characteristics of a low Baa profile. The company's credit profile is influenced by its monopoly position as the owner and operator of critical national electrical infrastructure in Kazakhstan, which ensures commercial stability. It also takes into account the continuing track record of strong credit metrics and liquidity with almost eliminated foreign-exchange risks, underpinned by the fairly favorable tariff-setting mechanism that allows for full cost recovery, the flexibility of its investment program, and its historically conservative financial policy.
According to Moody's, KEGOC's robust earnings and cash flow, combined with substantial cash balances that the company continues to prudently accumulate, will allow the company to maintain sound financial metrics, despite sizeable dividend payouts under its dividend policy and the ongoing gradual increase in debt to fund its extensive capital spending requirements.
Moody's anticipates KEGOC's debt coverage, measured by funds from operations (FFO) and net debt, to be very solid in 2023–24 (67 percent in 2022 and 55 percent in the 12 months ending September 30, 2023).
The rating additionally includes one notch of improvement to highlight KEGOC's strategic relevance to Sovereign Wealth Fund Samruk-Kazyna JSC (Baa2 positive) and, hence, the Government of Kazakhstan.
Through Samruk-Kazyna, the Kazakh government has significant influence over KEGOC's strategy and operations, including asset composition and allocation, board management and appointment, investments, financing strategies, and risk management.
As to Moody's, KEGOC's positive rating outlook is consistent with Kazakhstan's sovereign rating and Samruk-Kazyna's rating.