BAKU, Azerbaijan, June 24. Fitch Ratings agency has upgraded Long-Term Issuer Default Rating (IDR) of JSC National Company KazMunayGas (NC KMG) to 'BBB' from 'BBB-' and Short-term IDR to 'F2' from 'F3', Trend reports.
According to the company, the Outlook on the Long-term IDR is Stable.
The upgrade is driven by an upward revision of the company's Standalone Credit Profile (SCP) to 'bb' from 'bb-', which along with the agency's unchanged assessment of the strength of the ties between KMG and its ultimate shareholder Kazakhstan (BBB/Stable), led to the equalization of KMG with the sovereign rating in accordance with Fitch's rating criteria for government-related entities, and KMG's Short-term IDR is also equalized with the sovereign rating, the company said.
"The upward revision of KMG's SCP reflects our expectations of material deleveraging with EBITDA (Earnings before interest, taxes, depreciation and amortization) gross leverage remaining below 3x over 2023-2027. The SCP is supported by the company's integrated business model and medium-scale hydrocarbon production but also reflects its reliance on routes oil export routes via Russia," the agency said.
The agency assessed the socio-political implications of KMG's default as 'Strong' as the company is one of the main employers and contributors to the state's revenue, which controls critical oil transportation infrastructure and accounts for about 80 percent of domestic refining capacity.
"We assess the financial implications of its default as 'Very strong'. We believe KMG is a major Kazakh borrower in the Eurobond market and a proxy issuer for the government. It is the second-largest Eurobond issuer in Kazakhstan after the sovereign [issuer]", the agency added.
KMG is the state-owned oil and gas company of Kazakhstan. It was founded in 2002 by merging CJSC Kazakhoil and CJSC Oil&Gas Transportation.
It was formed by the decree of the President of Kazakhstan dated February 20, 2002 through the merger of Kazakhoil CJSC and Oil&Gas Transportation CJSC.
