The International rating agency Moody’s Investors Service has confirmed the Baa3 issuer ratings of Kazakh government-related issuers operating in the oil and gas sector – JSC NC «KazMunayGas» and its direct and indirect subsidiaries including JSC «KazTransOil». The outlook on the ratings is negative.
On 22 January 2016, Moody's placed the ratings of 32 integrated oil, exploration and production, and oilfield service companies in the EMEA (Europe, Middle East and Africa) region on review for downgrade. This reflected the substantial drop of oil prices and the continued oversupply in the global oil markets.
By virtue of its ownership structure, Moody's considers JSC «KazTransOil». to be a government-related issuer. Confirmation of JSC «KazTransOil»’s rating on Baa3 level comprises (1) a baseline credit assessment of ba1, which measures the company's underlying fundamental credit strength; (2) the Baa3 local-currency rating of the Kazakhstan government, with a negative outlook; (3) high dependence between the state and the company; and (4) Moody's assumptions of a high level of support from the state in case of need.
The application of Moody's Global Midstream Energy methodology, published in December 2010, results in an A rating for JSC «KazTransOil». However, the rating agency believes that the geopolitical risks associated with operating in Kazakhstan, as well as risks related to falling transportation volumes and growing competition from third-party pipelines justify positioning the company's baseline credit assessment in the «ba» rating category.
The negative outlook on the ratings is in line with the negative outlook for the sovereign rating and reflects the fact that a potential further downgrade of Kazakhstan's sovereign rating may lead to downgrade of the companies' ratings.
Press-relations service of «KazTransOil» JSC
