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Fitch affirms Kazakh Ekibastuz GRES-1 at 'BB+'

Fitch affirms International Bank of Azerbaijan at 'BB'/Negative; downgrades VR to 'f' (23 November 2016 18:46)

Date: 24 December 2015 17:17

Baku, Azerbaijan, Dec. 24

By Aygun Badalova - Trend:

Fitch Ratings has affirmed Kazakhstan-based electricity power plant Ekibastuz GRES-1 LLP's (Ekibastuz GRES-1) Long-term foreign currency Issuer Default Rating (IDR) at 'BB+'. The Outlook is Stable.

The ratings reflect the risks inherent in Ekibastuz GRES-1 business profile, including uncertainty in regulated tariffs after 2015, Fitch reported on December 24.

Positively, the ratings factor in the strong market position of Ekibastuz GRES-1, its strategic importance for the Kazakh state (BBB+/Stable), its high profitability and its solid credit metrics, according to the report.

While Ekibastuz GRES-1's forecast credit metrics are strong for its rating, these are offset by the business risk profile, Fitch said.

Fitch aslso noted that Ekibastuz GRES-1's ratings also benefit from a one-notch uplift for support from its 100 percent shareholder - JSC Samruk-Energy (Samruk-Energy, BBB-/Stable).

Fitch conservatively assumes 0 percent tariff growth for 2016-2018 and postponement of part of the company's capex to 2018-2019. This would result in Fitch's negative rating guidelines not being breached until 2019.

Fitch expects Ekibastuz GRES-1's extensive investment programme of KZT125 billion over 2016-2019 (including development and maintenance projects) to be extensively debt-funded. It estimates the company will continue generating healthy cash flows from operations of KZT34 billion on average over 2016-2019.

Fitch continues to consider strategic, operational and legal ties between Ekibastuz GRES-1 and its parent Samruk-Energy to be fairly strong and incorporate a one-notch uplift for parental support into the company's 'BB+' rating.

While there are no debt guarantees between the company and its parent, Fitch believes that the cross-default provisions in Samruk-Energy's $500 million eurobonds could be triggered by a default on Ekibastuz GRES-1's domestic bonds.

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