“The rating affirmation reflects our assessment that the company's 100% shareholder, Kazakhstan-based JSC NC KazMunayGas (KMG), is able and willing to provide liquidity support in a timely manner, even though its capacity to provide such support may be constrained over the medium term”, reads the press release remitted by the rating agency.
"The ratings on Rompetrol continue to depend largely on support from KMG, as Rompetrol's stand-alone credit profile, which we assess as 'CCC+', remains vulnerable. We understand that KMG's intention is to continue to support Rompetrol," said Standard & Poor's credit analyst Per Karlsson.
Karlsson said the company’s ability to provide timely support was constrained, because KMG’s cash was held with domestic banks and the company did not have the full flexibility in managing these funds.
The outlook is negative and reflects the agency’s concerns that in the harsher environment in the reminder of 2009 and 2010, Rompetrol’s cash flow generation is likely to be substantially lower than previously, while KMG’s capacity to support its subsidiary is likely to come under pressure.
In S&P’s view, the future support from KMG is uncertain as the parent company may need to support other subsidiaries considered of being of greater strategic importance.
Earlier this week, Standard&Poor’s cut long-term corporate credit rating of Kazakh-based company from ‘BBB-’to ‘BB+’, with stable outlook.
The decision comes after Fitch Rating’s affirmation of long-term foreign and local currency issuer default ratings to ‘BBB-‘ and ‘BBB’ respectively, as well as of short-term foreign currency IDR of KazMunaiGaz.
Certain economists, including of International Monetary Fund, expect the economy of Kazakhstan to shrink in 2009 for the first time in ten years, after the Gross Domestic Product dropped 2.2% in first quarter.
KazMunaiGaz is now in full control over The Rompetrol Group after the Chairman of TRG, Dinu Patriciu sold the remaining 25% equity stake in the oil company.
Double rebranding and a new CEO after Dinu Patriciu’s exit from Rompetrol
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