On April 26, 2018 the international rating agency S&P Global Ratings (hereinafter – agency) affirmed national oil pipeline operator JSC KazTransOil's (hereinafter – KTO) long-term credit rating at «BB-» with a Stable Outlook on continued solid financial results.
Agency notes that KTO maintains good financial flexibility, thanks to its adequate cash position and lack of debt at the company level. In 2018-2019, agency expects KTO to continue generating strongly positive free operating cash flow on the back of the recent tariff increases for transit and export that the company announced. Agency thinks that KTO's sizable accumulated cash balances cover all existing investment projects and allow for high dividend payouts.
The affirmation reflects agency’s view of KTO's unchanged stand-alone credit profile of 'bb+'. Agency assesses that there is a high likelihood that KTO would receive timely and sufficient support from the government of Kazakhstan if needed.
However, the rating on KTO remains constrained by the rating on its parent, KMG (BB-/Stable/--). Agency believes KTO cannot be insulated from the risks attributable to the group, therefore agency does not rate subsidiary above the parent.
Agency would likely raise the rating on KTO if they took a similar action on JSC NC KazMunayGas.
