The rating actions follow the downgrades of Republic of Kazakhstan on Feb. 9, 2015 and JSC NC KazMunayGas on Feb. 16, 2015. The downgrade of KTO reflects the view of S&P that KTO’s rating is capped at its status as strategically important subsidiary of KMG group, and view that there is a high likelihood that KTO will receive timely and sufficient extraordinary support in the event of financial stress.
According to S&P, KTO’s strategically important status within the KMG group and its importance to the government of Kazakhstan are underpinned by the KTO’s role as the main pipeline network operator in the country.
S&P highlights that KTO’s stand-alone credit profile (bb+) exceeds same indicator of KMG (b).
Also, S&P analysts mention KTO’s solid market position, limited competition from rail and tanker transport, no debt at KTO level, good financial flexibility due to adequate cash position, and potential to defer most of new projects.
S&P expects that in 2015 KTO will continue to generate strongly positive free operating cash flow on the back of the tariff increases that took place in 2014. S&P think that KTO’s sizable accumulated cash balances cover all existing investment projects and allow for high dividend payouts.
Reference:
«KazTransOil» JSC is the subsidiary of «KazMunayGas» NC JSC and the national operator of the Republic of Kazakhstan on the main oil pipeline. The company manages a network of main oil pipelines stretching over
5,6 thousand km and water pipelines over 1,9 thousand km long. The production facilities of «KazTransOil» JSC are located in Karaganda, Pavlodar, South Kazakhstan, North Kazakhstan, Atyrau, Mangistau, West Kazakhstan, Kyzylorda, Almaty, Aktobe and East Kazakhstan regions.
Press Service of «KazTransOil» JSC
