Fitch changes KazTransOil outlook to positive

Fitch Ratings said it has changed its outlook on Kazakhstan's OTC KazTransOil and its $150 million notes to positive from stable and affirmed the ratings for the company at senior unsecured BB and short-term B and its $150 million notes at BB.

Fitch said the outlook reflects KazTransOil's modest future leverage, and favorable tariff environment, as well as the company's key position as the oil pipeline operator, within a core element of Kazakhstan's energy sector.

The ratings also consider the regulatory system's relatively short track record, the systemic obsolescence within the existing networks, and Russian export quotas, as well as - to a lesser extent - the competitive threat posed by the new export pipeline for high-quality crude.

Fitch said the ratings may be upgraded in the future if the currently favorable tariff environment is sustained, and KazTransOil's network assets and cost structure are further rationalized. Any evidence of cross-subsidy from KazTransOil to other parts of KMG group will be viewed negatively.

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