Moody's upgrades Intergas Central Asia rating

/IRBIS, October 13, 04/ - Moody's international rating agency upgraded the senior unsecured issuer rating of Intergas Central Asia, the state-owned gas transmission company of Kazakhstan, to Baa3 from Ba1. Information below is original text of Moody's news. MOODY'S UPGRADES TO Baa3 INTERGAS CENTRAL ASIA'S SENIOR UNSECURED ISSUER RATING; OUTLOOK REMAINS POSITIVE Moody's Investors Service has today upgraded the senior unsecured issuer rating of Intergas Central Asia, ("ICA") the state-owned gas transmission utility of Kazakhstan, to Baa3 from Ba1. The rating outlook remains positive. Moody's says the upgrades reflected the refinancing of secured debt within ICA's debt capital structure, which had previously caused subordination for unsecured creditors, and that the improved position of senior unsecured creditors is now reflected in the equalised ratings. According to Moody's, the ratings would remain equalised for as long as the proportion of secured debt within ICA's debt capital structure remained below 20%. Moody's adds that ICA's ratings take account of the increasing strategic importance of this wholly state-owned company to Kazakhstan (sovereign rating Baa3, positive outlook). There are no plans to privatise ICA, and Moody's believes that the Kazakhstani government would support the group in case of need. Looking ahead, Moody's expects the company's rating to move in line with that of the sovereign. Intergas Central Asia (ICA) benefits from increasing natural gas production in and exports from Kazakhstan but, above all, its revenues are driven by the rising transit of gas from Turkmenistan to Russia (and thence on to Western Europe). ICA's revenues are not regulated but negotiated on an annual basis with its shippers, principally Ba1-rated Gazprom. The predictability of ICA's tariffs is underpinned by Gazprom's 25-year gas supply contract with Turkmenistan, for which the sole viable export route for gas is via ICA's pipelines across Kazakhstan. Moody's expects that these volumes will grow in the future as Gazprom requires increasing amounts of gas to fulfill its international supply contracts with Western European offtakers. ICA has significant capital expenditure plans, and earlier this year assumed the debt of KazTransGas, its parent company. Debt levels have risen considerably over the past two years, and may continue to rise if all of the planned capital expenditure is undertaken. However, the rating agency notes that ICA will not undertake such strategic developments unless it has Government approval and support and long-term ship-or-pay commitments in place from its counterparties. Intergas Central Asia, headquartered in Astana, is the state-owned gas transmission company of Kazakhstan. With over 10,000km of trunk pipelines, the company transmitted 117bcm of gas in 2003 and had revenues of over KZT52 billion ($362 million). The company is indirectly 100% state-owned through KazTransGas and the state hydrocarbon conglomerate, KazMunaiGas. Source - REUTERS. [2004-10-13]