QazaqGaz National Company was confirmed the rating of “BBB-” with a “stable” forecast

The international rating agency Fitch Ratings has confirmed the long-term issuer default rating (IDR) of NC QazaqGaz JSC at “BBB-”, the forecast is stable. A similar rating was assigned to the subsidiaries of Intergas Central Asia JSC and KazTransGas Aimak JSC.

As noted in the message, NC QazaqGaz JSC is a natural monopoly for transit, transportation and distribution of gas in Kazakhstan. The Сompany is also engaged in export and production of gas.

The rating of the National Gas Company of Kazakhstan is “BBB-” is by one grade below of its ultimate shareholder, the State. According to Fitch Ratings, this reflects the relatively strong ties between NC QazaqGaz JSC and the State. At that, the Agency continues to assess the Company’s standalone credit profile at “BBB-” despite the pressure from oil and gas price volatility and an expected increase in capital expenditures in the near term. These factors may result in the increase in  gross leverage from Funds From Operations (FFO) to the level above 3.0x.

In addition, the long-term issuer default rating of QazaqGaz is supported by the Company’s monopoly position in the  segment of gas transmission and distribution within the country, as well as its dominant position in the field of gas transportation, export and sale.

According to the Agency’s analysts, the ratings of subsidiaries reflect high legal and operational incentives as well as high or medium strategic incentives for providing support between Intergas Central Asia JSC and KazTransGas Aimak JSC with their parent structure – NC QazaqGaz JSC.

According to Fitch Ratings, strong ties of NC QazaqGaz JSC with the State are additionally reinforced by its recent status as a National Company. This makes it one of the agents for the implementation of the policy in the field of development of the fuel and energy complex of the Republic of Kazakhstan.

According to the Agency, QazaqGaz expects the improvement of the profitability of its domestic business within the country in the next two to three years.

Fitch Ratings analysts believe that NC QazaqGaz JSC has significant liquidity, as cash and cash equivalents are at the level of 457 bln. KZT as of June 30, 2021. According to the Agency, these funds are more than sufficient to cover the debt with short terms until the payment to the amount of 24 bln. KZT.

A substantial cash reserve is expected to be used in investments of 2022-2023. In addition, NC QazaqGaz JSC has a history of good access to Kazakh banks, although it does not have long-term committed credit lines.