TEXT-Fitch revises Apetra's outlook to stable; affirms at 'AA'

Thu Jan 31, 2013 5:43am EST

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(The following statement was released by the rating agency)

Jan 31 - Fitch Ratings has revised APETRA's Outlook to Stable from Negative and affirmed its Long-term foreign and local currency ratings at 'AA' and Short-term rating at 'F1+'. The rating action follows the revision of the Outlook on the Kingdom of Belgium's Issuer Default Rating (IDR) to Stable from Negative (see 'Fitch Revises Outlook on Belgium to Stable; Affirms at 'AA' dated 23 January 2013 at www.fitchratings.com). The Outlook changes reflect the alignment of APETRA's rating to its sponsor (the Kingdom of Belgium) due its strategic importance for Belgium.

RATING RATIONALE

The Outlook revision reflects the corresponding revision of the Outlook on Belgium (see 'Fitch Revises Outlook on Belgium to Stable; Affirms at 'AA' dated 23 January 2013 at www.fitchratings.com). Fitch continues to deem APETRA's ratings to be aligned with those of Belgium ('AA'/Stable/'F1+') due to the company's strategic importance for the country.

By virtue of its status as a limited liability company, APETRA is not subject to bankruptcy or liquidation proceedings. The ratings take into account the strategic value of the company for Belgium because of its public service role.

The rating change is in application of Fitch's criteria on 'Ratings of Public Sector Entities - Outside the United States' whereby APETRA's ratings are credit linked to those of its sponsor, the Belgian state.

Fully owned by the Belgian state, APETRA is in charge of ensuring the security of oil supply for Belgium and enables the country to fulfill its international obligations on ownership of a minimum stock of crude oil and petroleum products.

APETRA is the exclusive manager of this obligation for Belgium and at end-2012, managed 4.3 million tons of strategic oil stocks. Although APETRA does not aim to make profit, it recorded a net profit of EUR122.1m in 2011 and EUR79.9m in the first half of 2012. At end-2012, debt amounted to EUR1,320 million which represented approximately 13 years of cash generated.

RATING SENSITIVITIES

The Stable Outlook reflects the Outlook on Belgium's sovereign ratings. Although highly unlikely, a change in APETRA's legal framework and lower state support could trigger a downgrade. Any negative action on Belgium's sovereign ratings would also be automatically reflected by APETRA's ratings.

KEY ASSUMPTIONS AND SENSITIVITIES

The ratings are based on the following assumptions:

- An intermediate scenario (with a change of two percentage points on average per year of crude oil prices)

- The implementation of the new European directive since 1 January 2013 which implies a slight increase of the level of stock manages by APETRA.

APETRA is sensitive to the level of contribution collected on every litre of petroleum product released for consumption by oil companies and distributors in Belgium. Fitch estimates that the lack of definition of a minimum guaranteed contribution to APETRA in case of lower oil prices reflects a risk in terms of APETRA covering its costs.

The rating actions are as follows:

- Long-term rating: affirmed at 'AA'; Outlook Stable

- Short-term rating: affirmed at 'F1+'

- Senior unsecured notes: affirmed at 'AA'

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