S&P downgrades rating of KazTransOil to BB+; outlook "negative

Date: 15:04, 20-02-2015.

Almaty. February 20. KazTAG - Standard & Poor's has downgraded long term credit rating of KazTransOil from BBB- to BB+; outlook "negative", reports the international rating agency.
"Standard & Poor's Ratings Services said today that it lowered its long-term corporate credit ratings on Kazakhstan-based oil pipeline operator KazTransOil (KTO) to 'BB+' from 'BBB-'.The outlook is negative," reads the message.
"The rating actions follow the downgrades of Kazakhstan on Feb. 9, 2015  and KazMunayGas NC JSC (KMG) on Feb. 16, 2015. The downgrade of KTO reflects our view that its rating is capped at the level of that on KMG, KTO's status as a "strategically important" subsidiary of the KMG group, and our view that there is a high likelihood that KTO would receive timely and sufficient extraordinary support in the event of financial stress. We assume that this would likely come directly from the government, rather than from the parent. Therefore, we determine the corporate credit rating on KTO based on its stand-alone credit profile (SACP) plus uplift for potential government support. In accordance with our group rating methodology, the rating on KTO is currently capped by the rating on its parent, KMG. We currently assess KMG's SACP as 'b'," reads the message.
The negative outlook reflects that on the parent, KMG. "In accordance with our group rating methodology, the rating on KTO is capped by the rating on KMG, and if the parent's rating is further downgraded by one notch, that most likely would lead to a similar rating action on KTO," said the agency.

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