S&P assigned 'BB+' long-term debt rating to a 255 million EUR loan provided by the EBRD to Kazakhstan Electricity Grid Operating Co.

/Standard & Poor's, Moscow, July 02, 08/ - Standard & Poor's Ratings Services said today that it had assigned its 'BB+' long-term debt rating to a И255 million loan provided by the European Bank for Reconstruction and Development (EBRD) (AAA/Stable/A-1+) to Kazakhstan Electricity Grid Operating Co. (KEGOC; BB+/Negative/-). The loan has a floating interest rate and consists of two parts: - A loan of up to 127.5 million EUR maturing in 15 years; - A loan of up to 127.5 million EUR including three tranches: a. 75 million EUR maturing in 15 years; b. 47.5 million EUR maturing in 12 years; c. 5 million EUR maturing in nine years. Under the loan's terms KEGOC, is subject to several financial covenants including: - Total debt to total capital of not more than 50%; - Total debt to EBITDA not exceeding 5x; - EBITDA interest coverage not less than 3x; - A current ratio of above 1x. "The proceeds from the loan will be used to finance the modernization and rehabilitation of KEGOC's substations and high-voltage equipment to ensure the efficiency, reliability, and safety of Kazakhstan's transmission system," said Standard & Poor's credit analyst Eugene Korovin. The loan ranks at least pari passu with the present and future claims of all of KEGOC's other creditors and the rating on the loan is on a par with the 'BB+' long-term corporate credit rating on KEGOC. The rating on KEGOC is based on a top-down approach. The rating is two notches below the local currency rating on the sovereign, because of KEGOC's strategic importance to the Republic of Kazakhstan (foreign currency BBB-/Negative/A-3; local currency BBB/Negative/A-3). The rating on KEGOC is constrained by the company's aggressive financial policy, large grid investment program and associated construction risk, and high foreign currency and floating interest risk exposure, as well as by Kazakhstan's relatively weak power sector characteristics. These risks are mitigated by state support to KEGOC in the form of guarantees on most of its debt, supportive tariffs, and potential extraordinary support. In addition, KEGOC benefits from its monopoly position in a stable and low- operating-risk electricity transmission business. We estimate KEGOC's stand-alone credit quality at 'B+'. For detailed information please contact to: Eugene Korovin, Moscow, (7) 495-783-4090; evgueni_korovin@standardandpoors.com Sergei Gorin, Moscow, 7 495 783 4132; sergei_gorin@standardandpoors.com [2008-07-02]