Moody's rates Nostrum notes B2

Moody's Investors Service said it assigned a B2 (LGD4, 53%) rating to the proposed $400 million of notes to be issued by Nostrum Oil & Gas Finance BV and guaranteed by its indirect 100% parent, Nostrum Oil & Gas LP, and all of its subsidiaries. Nostrum Oil & Gas' B2 corporate family rating and B2-PD probability of default rating were affirmed, and the outlook is stable.

The proceeds will be used for the sole purpose of financing a loan to Zhaikmunai LLP, a Kazakhstan-incorporated, 100% indirectly owned operating subsidiary of Nostrum Oil & Gas, and Zhaikmunai will substitute Nostrum Oil & Gas Finance as the issuer of the notes.

The agency said Nostrum Oil & Gas' B2 corporate family rating reflects the group's relatively modest scale of operations by international standards, high field concentration, large-scale investment plan and exposure to Kazakhstan's country and operational risks.

More positively, the rating also acknowledges the substantial improvement in Nostrum Oil & Gas' operating and financial metrics following an increase in the company's oil production and the launch of phase 1 of its GTF, the company's positive track record of implementing large investment projects, its good field geology and its conservative financial profile and liquidity management, Moody's said.

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