Fitch lowers Mangistau Electricity

Fitch Ratings said it downgraded Mangistau Electricity Distribution Network Co.'s long-term foreign-currency issuer default rating to B+ from BB-.

The outlook is stable.

The company's senior unsecured rating also was downgraded to B+ from BB- with a recovery rating of RR4, indicating a 50% expected default recovery.

The downgrades follow the downgrade of the company's majority shareholder, Kazakhstan Utility Systems, which owns 50.19% of equity or 52.63% of ordinary shares, Fitch said.

The ratings reflect the company's small size, industry and customer concentration and an expectation of negative free cash flow, the agency said.

The ratings also consider its long-term tariff regulation despite below-inflation expected tariff growth over 2018 to 2020, along with sound quality counterparties and a near-monopoly position, Fitch said.

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