Fitch rates Mangistau Electricity bond BBB-

Fitch Ratings said it assigned a final local-currency senior unsecured rating of BBB- to Mangistau Electricity Distribution Co. JSC’s 2.4 billion in Kazakhstani tenge 9% domestic bond due 2024.

The rating is in line with the company’s long-term local-currency issuer default rating of BBB- as the bond constitutes a direct and unsecured obligation of the company.

The company also has a long-term foreign-currency issuer default rating of BB+, national long-term rating of AA(kaz), short-term foreign-currency issuer default rating of B, foreign-currency senior unsecured rating of BB+ and local-currency senior unsecured rating of BBB-.

The proceeds will be used to finance the company’s investment program until 2015.

The ratings are notched down from that of Kazakhstan by three levels, reflecting the moderate strength of the links between the company and its ultimate parent, Fitch said.

The company’s credit profile is supported by its near-monopoly position in electricity transmission and distribution in the region of Mangistau, one of Kazakhstan’s strategic oil and gas regions, the agency said.

The ratings also are underpinned by strong prospects for economic development and expansion in the region, Fitch said.

The ratings are constrained by the company’s small scale of operations, which limits its cash flow generation capacity, high exposure to a single industry and high customer concentration, the agency said.

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