S&P puts Petrokazakhstan on positive watch

Standard & Poor's said it placed its B+ long-term corporate credit rating on PetroKazakhstan Inc. on CreditWatch with positive implications following China National Petroleum Corp.'s (not rated) offer to acquire Petrokazakhstan.

The CreditWatch placement reflects the potential benefits of the acquisition by an entity with a likely stronger credit profile, pro forma for the additional debt; the potential for a degree of implicit parental support; and the possibility that the new parent's bargaining power will help to resolve various tax, regulatory, and corporate governance issues currently affecting Petrokazakhstan.

The CreditWatch also reflects lack of clarity about several key issues that will drive the future rating level: The status of Petrokazakhstan's debt in the group structure. The risks related to change-of-control provisions in Petrokazakhstan's debt are, however, mitigated by the company's strong liquidity position.

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