Fitch affirms Kuwait Energy

Fitch Ratings said it affirmed Kuwait Energy plc's long-term issuer default rating and $250 million 9½% notes due in 2019 at long-term senior unsecured CCC with a recovery rating of RR4.

Fitch said it believes the probability of default remains high without available alternative sources of long-term funding to repay the $250 million notes maturing in August 2019.

In the first quarter, Kuwait Energy repaid the outstanding amount under a $100 million 2016 forward sales agreement with Vitol and Qatar First Bank (QFB) agreed to convert its 50% share in the $100 million convertible bonds into equity.

However, with only $20 million available under the Vitol prepayment facility, which expires in December 2018 and projected cash on hand of under $100 million over the next 12 months, Kuwait Energy's liquidity remains stretched, Fitch said.

The company is currently pursuing various options, including the announced sale of a stake in Block 9 to Dragon Oil for $100 million in the first quarter. The deal is pending approval by Iraqi authorities.

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