TEXT-Fitch upgrades NC KMG to 'BBB'; outlook stable

Wed Nov 21, 2012 7:12am EST

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(The following statement was released by the rating agency)

Nov 21 - Fitch Ratings has upgraded KazMunaiGaz National Company's (NC KMG) Long-term foreign currency Issuer Default Rating (IDR) to 'BBB' with a Stable Outlook. Fitch has also upgraded KazMunaiGaz Finance Sub B.V.'s foreign currency senior unsecured rating to 'BBB'. A full list of rating actions is at the end of this release.

The rating actions reflect the agency's upgrade of Kazakhstan's Long-term foreign and local currency IDRs to 'BBB+' from 'BBB' and 'A-' from 'BBB+', respectively, on 20 November 2012. The Outlooks on Kazakhstan's Long-term foreign and local currency IDRs are Stable (for further information, see 'Fitch Upgrades Kazakhstan to 'BBB+'; Outlook Stable', at www.fitchratings.com.)

NC KMG continues to benefit from strong links with the Kazakh government. However, full and timely financial support, which would allow a full rating alignment, is not certain without a significant portion of debt with explicit guarantees. Consequently, NC KMG's ratings are notched down one notch from the sovereign ratings.

WHAT COULD TRIGGER A RATING ACTION?

Positive: Future developments that may, individually or collectively, lead to positive rating action include:

- NC KMG's ratings will be affected by a sovereign rating action, i.e., an upgrade of the sovereign ratings would be replicated by NC KMG's ratings with a one notch differential.

Negative: Future developments that may, individually or collectively, lead to negative rating action include:

- A downgrade of the sovereign ratings would be replicated by NC KMG's ratings with a one notch differential.

- Evidence of weakening state support would be negative for the ratings.

- Aggressive acquisitions and/or an investment programme resulting in further material deterioration of the standalone credit metrics could also be negative for the ratings.

The rating actions are as follows.

NC KMG

Long-term foreign currency IDR: upgraded to 'BBB'; Outlook Stable

Long-term local currency IDR: upgraded to 'BBB+'; Outlook Stable

Short-term foreign currency IDR: affirmed at 'F3'

Local currency senior unsecured rating: upgraded to 'BBB+'

KazMunaiGaz Finance Sub B.V.

Foreign currency senior unsecured rating: upgraded to 'BBB'

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