Fitch affirms long-term default ratings of Eastcomtrans at level "B"; outlook "Stable"

/Fitch Ratings, Москва, June 2, 15, heading by KASE/ – Fitch Ratings has affirmed Kazakhstan-based Eastcomtrans LLP's (ECT) Long-term foreign and local currency Issuer Default Ratings (IDRs) at 'B', and National Long-term Rating at 'BB(kaz)'. The Outlooks are Stable. A full list of rating actions is at the end of this rating action commentary. KEY RATING DRIVERS IDRS, NATIONAL RATINGS AND SENIOR DEBT ECT's ratings reflect solid financial metrics represented by strong and stable cash- generating capacity and moderate leverage. The ratings also reflect high customer concentrations, low geographical diversification of operations and a diminished margin of safety on its main covenants. ECT's financial profile is supported by a healthy EBITDA margin of about 75% on average during 2008-2014. Fitch estimated fixed charge cover stayed at a solid 3.4 in 2014, reflecting almost full utilisation rates and moderate leverage. Debt/adjusted EBITDA increased to 2.7 at end-2014 from 2.6 at end-2013, but remained comfortable. We expect debt to peak in 2015 as the company finalises its capex programme. ECT has to repay a manageable KZT32bn of debt in 2015. ECT's revenues are highly dependent on a single client, Tengizchevroil LLP (TCO Finance, secured notes rated BBB+/Stable), which accounted for 57% of total revenue in 2014 (2013: 62%). Although ECT continues to implement a diversification strategy, the customer concentration is expected to remain high for the foreseeable future. TCO contracts are long-term and uncancellable contracts, but most of these expire in 2016. Management expects most of these contracts to be extended and the rest to be substituted by contracts with new customers. Although there is a risk of adverse effects on cash flows in case freed rolling stock is not leased out promptly, Fitch estimates indicate that ECT's debt servicing capacity should not be significantly affected by a temporary decl Primary Analyst Aslan Tavitov Associate Director +7 495 956 70 65 Fitch Ratings CIS Limited Valovaya Str, 26 Moscow Secondary Analyst Timur Lebedev Analyst +7 495 956 9983 Committee Chairperson James Watson Managing Director +7495 956 6657 Media Relations: Julia Belskaya von Tell, Moscow, tel. + 7 495 956 9908/9901, julia.belskayavontell@fitchratings.com [2015-06-03]