Fitch lowers Sevkazenergo

Fitch Ratings said it downgraded JSC Sevkazenergo's long-term foreign-currency issuer default rating to B+ from BB-.

The outlook is stable.

The agency also said it downgraded the company’s national long-term rating to BBB (kaz) from BBB+(kaz) and its local-currency senior unsecured rating to B+ from BB- with recovery rating of RR4.

The downgrades follow the downgrade of Sevkazenergo's sole shareholder, JSC Central-Asian Electric-Power Corp. (Caepco).

Sevkazenergo's ratings are aligned with Caepco’s ratings, reflecting its position as one of two key operating subsidiaries within the Caepco group, contributing 43% of group EBITDA, the agency said.

The downgrades reflect the expected deterioration of Caepco’s credit metrics from 2016 through 2019 as a result of the Kazakh tenge's devaluation in 2015 and the company's high exposure to foreign-currency fluctuation risks, Fitch said.

The rating also reflects Sevkazenergo's vertical integration, stable regional market share and benign regulatory regime in the distribution segment, the agency said.

The rating is constrained by the company's weak liquidity profile, unfavorable regulatory environment in the generation segment and significant capital expenditure needs, Fitch said.

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