S&P revises outlook on KazTransGas, KazTransOil
By Kamila Aliyeva
S&P Global Ratings has revised its long-term corporate credit ratings on KazTransOil JSC (KTO), KazTransGas JSC (KTG) and its subsidiary company Intergas Central Asia (ICA) to stable from ‘BB’ to ‘BB-’.
“The ratings of KTO and KTG have been lowered after a similar action with the ratings of their direct owner KazMunaiGas. We believe that both companies are state-related entities and do not revise our assessment of the likelihood of granting extraordinary support to companies by the government of Kazakhstan,” S&P statement said on November 28.
"At the same time, we believe that these subsidiaries cannot have a rating higher than the parent company's rating, since there are no effective mechanisms to protect against potential negative interference from KMG whose stand-alone credit profile (SACP) has ‘b’ level. Thus, the downgrade of KMG's ratings caused a similar action in relation to KTO and KTG,” according to the report.
S&P sees KTG as a company with “moderate strategic importance” for the KMG group, and it is believed that there is a “moderately high” probability of providing KTG with timely and sufficient extraordinary support from the group in a situation of financial stress.
“At the same time, we assume that this support will most likely be provided directly from the government, and not from the parent company. As a result, our long-term rating of the company KTG reflects its assessment of SACP and currently does not take into account the allowance for possible support from the state,” the report said.
The outlook for KTG's stable rating reflects a similar outlook on its direct owner's rating, KMG.
“Any negative or positive rating actions with respect to KTG will most likely be due to similar rating actions with respect to its parent company, rather than a change in the SACP estimate, which we are currently assessing at the level of ‘bb’,” S&P analysts explained.
With regard to the national company KazTransOil, it is stated that KTO has a “high strategic importance” for the KMG group.
“We believe that there is a high probability of providing KTO with timely and sufficient extraordinary support from the state in a situation of financial stress. At the same time, we assume that this support will most likely be provided directly from the government, and not from the parent company. At the moment, we do not take into account an allowance for possible support from the state, which is due to the relatively high SACP rating of KTO at the level of ‘bb+’ (in comparison with the parent company),” S&P believes.
“The stable outlook according to the rating of the KTO reflects a similar forecast for the rating of its direct owner, KMG. Any negative or positive rating actions in relation to the KTO are likely to be caused by similar rating actions with respect to the parent company, rather than a change in the assessment of the credit quality of the KTO,” the message said.
On November 23, 2017, the rating of the national oil company KazMunayGas was lowered to the level of ‘BB-’ with a stable outlook.
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Kamila Aliyeva is AzerNews’ staff journalist, follow her on Twitter: @Kami_Aliyeva
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