S&P rates KazMunaiGaz notes BB+

Standard & Poor's said it assigned a BB+ debt rating to the proposed senior unsecured notes to be issued by KazMunaiGaz Finance Sub BV and guaranteed by JSC NC KazMunayGas, which has a BB+ rating and stable outlook. A recovery rating of 4 was assigned to the proposed bond, indicating an expectation of 30% to 50% recovery for creditors in the event of a default. The recovery analysis assumes about $2 billion issuance under the notes. The ratings are subject to final documents. The final amount, maturity and coupon are to be determined at placement.

The agency said it believes recovery prospects for the notes are likely to be determined by the ability and willingness of the Kazakh government to negotiate with bondholders.

The rating is one notch lower than the long-term foreign-currency credit rating on the company's ultimate owner, the Republic of Kazakhstan, which has a foreign-currency BBB- and A-3 ratings, local-currency BBB and A-3 ratings and a stable outlook.

There is an "extremely high" likelihood of the government providing timely and sufficient extraordinary support to the company in the event of financial distress, S&P said.

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