Moody's has lowered ratings of National Company KazMunaiGas and its core subsidiaries to the level of Baa3

/IRBIS, November 1, 2010/ - Moody's Investors Service on Oct. 29 has taken several rating actions on National company KazMunaiGas ("NC KMG" or the "Group") and its subsidiaries in connection with lowering the corporate rating of (CFR) by one notch to "Baa3"; and change the forecast "Stable" from "Negative", indicated in the message Moody's. Specified rating actions include: - senior unsecured debt rating of NC KMG was downgraded to "Baa3" from "Baa2"; - ratings of four subsidiary companies KMG been amended as follows: - JSC "KazMunaiGas (KMG) issuer rating downgraded to "Baa3" from "Baa2". Outlook changed to Stable from Negative. - KazTransOil (CTO) issuer rating downgraded to "Baa3" from "Baa2". Outlook changed to Stable from Negative. - KazTransGas (CTG) issuer rating downgraded to "Baa3" from "Baa2". Outlook changed to Stable from Negative. - JSC Intergas Central Asia (ICA), a subsidiary of KazTransGas issuer rating downgraded to "Baa3" from "Baa2". Outlook changed to Stable from Negative. Moody's defines KMG as the issuer associated with the government (GRI). The rating agency downgraded the baseline credit assessment of the group (DSS) to 13 to 12 (respectively, to "Ba3" and "Ba2" on a global scale). Support and dependency levels remain unchanged. Lowering CFR KMG reflects Moody's assessment of the weakening financial profile of the group, resulting in a potential slowdown of cash flow, which led to weaker-than-expected leverage metrics in 2010-2012. Estimate reflects: (I) uncertainty about the level of dividends that can be obtained from the affiliated group companies, taking into account the potential increase in capital expenditures at the branch level; (II) substantial commitments of capital, with the bulk of investments aimed at green-field projects in the field that will not generate immediate cash flows and (III) is expected to increase in consolidated net debt of the next three years. Moody's now considers it unlikely that KMG will be able to demonstrate the restoration of financial performance, commensurate with a rating of "Baa2". In particular, these requirements include the retention ratio of cash flow (RCF) / net debt ratio above 40%, and total consolidated debt / EBITDA combined ratio below 2.5 in 2010-2012. In this case, the ratings of the group continues to reflect: (I) of its strategic importance to the economy of Kazakhstan; (II) the magnitude of the asset base of the group, (III) a positive experience and good prospects for growth of business groups in the exploration and production (E & P) and (IV) more value of oil and gas transportation segment. [2010-11-01]