S&P assigns ratings to Samruk-Energo (Kazakhstan); outlook Stable

/Standard & Poor's, Moscow, November 20, 12, heading by KASE/ - Standard & Poor's Ratings Services said today that it had assigned its 'BB+' long-term corporate credit rating, 'B' short-term corporate credit rating, and 'kzAA-' national scale rating to Kazakhstan state-owned vertically integrated electricity utility Samruk-Energy JSC. The outlook is stable. The ratings on Samruk-Energy, which is fully owned by the government of Kazakhstan (BBB+/Stable/A-2; Kazakhstan national scale 'kzAAA') through its investment vehicle Samruk-Kazyna (BBB+/Stable/A-2; Kazakhstan national scale kzAAA'), reflect our assessment that there is a "high" likelihood of extraordinary government support in the event of financial distress (in accordance with our criteria for government-related entities). They also reflect the company's stand- alone credit profile (SACP) of 'b+', which is based on our view of its "fair" business risk profile and "aggressive" financial risk profile. Our assessment that there is a "high" likelihood of state support is based on our view of Samruk-Energy's "important" role for and "very strong" link with the government. The stable outlook reflects that on the sovereign rating as well as our expectation that Samruk-Energy continues to enjoy a "high" likelihood of extraordinary government support in the event of financial distress. Upside potential for the long-term corporate credit rating might arise from stronger- than-expected operational and financial performance, a reduction in investment plans without jeopardizing long-term operational stability, or significant equity injections from the government, which would decrease the need for the new borrowing. All else being equal, we believe an adjusted debt-to-EBITDA ratio of below 3.0x could lead to an upward revision of the SACP and, consequently, to a higher corporate credit rating. A one-notch downward revision of the company's SACP, however, would not result in a downgrade, provided that the likelihood of extraordinary government support remains unchanged. Nevertheless, we could lower the long-term corporate credit rating if the company's liquidity profile were to significantly deteriorate, or if debt leverage increased by more than we currently expect. We see a Standard & Poor's- adjusted debt-to-EBITDA ratio exceeding 4.0x, without tangible plans to be decreased in the short term, as potentially leading to a lower SACP. If we revised our assessment of the likelihood of timely and sufficient state support, it would result in a change to the ratings under our criteria, provided the SACP remains at 'b+'. This could be triggered by any unexpected privatization of a significant share of the company or by any unanticipated weakening of support for another Kazakhstan government-owned entity. Primary Credit Analyst: Sergei Gorin, Moscow, (7) 495-783-4132; sergei_gorin@standardandpoors.com Secondary Contact: Elena Anankina, CFA, Moscow, (7) 495-783-4130; elena_anankina@standardandpoors.com [2012-11-21]