Fitch affirms KMG International

Fitch Ratings said it affirmed KMG International NV's long-term issuer default rating at B+. The outlook is stable.

The issuer default rating was removed from rating watch negative.

The affirmation follows the announcement by JSC NC KazMunayGas (BBB-/stable) that the deal to sell a 51% stake in KMG International to CEFC China Energy will not be finalized and KMG International will remain fully owned by KazMunayGas.

“KMGI's B+ rating remains unchanged due to improvement in its standalone credit profile, but weakening strategic and legal ties between the company and NC KMG,” Fitch said in a news release.

“The rating captures risks stemming from litigation brought forward in May 2016 by Romania's Directorate for Combating Organised Crime and Terrorism (DIICOT), where KMGI, Rompetrol Rafinare SA (RRC) and Oilfield Exploration Business Solutions were summoned as civil liability parties in a case under investigation by DIICOT.

“The investigation may have significant negative contingent financial consequences for KMGI, but the timing of the investigation resolution is highly uncertain.”

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