Fitch upgrades Kazakh KEGOC rating

Nov 23. Trend

By E.Kosolapova

Fitch upgrades Kazakh KEGOC ratingFitch Ratings has upgraded Kazakhstan Electricity Grid Operating Company’s (KEGOC) Long-term foreign currency Issuer Default Rating (IDR) to ‘BBB+’ from ‘BBB’, the agency said in its press release on Friday.

The Outlook on the Long-term IDR is Stable. A full list of rating actions is provided below.

Short-term foreign currency IDR upgraded to ‘F2’ from ‘F3’.

The upgrade reflects Fitch’s upgrade of Kazakhstan’s long-term foreign and local currency IDRs to ‘BBB+’ from ‘BBB’ and to ‘A-‘ from ‘BBB+’.

“KEGOC’s ratings are aligned with those of the Republic of Kazakhstan, due to its 100%-indirect-state-ownership, direct government guarantees for a large part of its debt (about 47% at end-Q312), and the strategic nature of Kazakhstan’s national electricity transmission grid,” the press release says.

Fitch forecasts KEGOC to report positive operational cash flow in 2012-2015. However, free cash flow (FCF) is likely to remain negative, mainly driven by substantial capex plans

For 2012, Fitch estimates KEGOC’s cash flow from operations at about KZT13.9bn, before capex (KZT24bn) and dividends (KZT2.3bn). The agency expects KEGOC to rely on new borrowings to finance the cash shortfall.