Fitch Says Upgrades Rompetrol Group to 'B+' After Parent KazMunayGas Provides Support

Fitch issued the following statement:

"Fitch Ratings has today upgraded Netherlands-based The Rompetrol Group N.V.'s (TRG) Long-term foreign currency Issuer Default Rating (IDR) to 'B+' from 'B'. The rating Outlook has been revised to Stable from Negative.

The upgrade reflects TRG's improved standalone financial profile and liquidity position following a cash injection of USD1bn from the company's sole shareholder, the Kazakhstan-based integrated oil and gas company KazMunaiGaz National Company (NC KMG, rated 'BBB-'/'F3'/Negative Outlook). Fitch understands that the cash injection, received in the form of advances, may be partially converted into TRG equity after obtaining the relevant regulatory and internal approvals. The cash injection should also help mitigate the negative impact of TRG's weaker cash flow in 2009 driven by a deep trough in conditions for refining companies, including depressed refining margins and lower refinery utilisation rates.

Fitch's credit rating for TRG is based on a bottom-up approach and reflects the company's standalone credit profile assessed at 'CCC'/Stable and a three notch uplift for parental support from NC KMG, in line with Fitch's parent and subsidiary rating linkage methodology. The agency assesses strategic and legal ties between TRG and NC KMG as strong, whilst operational ties are moderate. Strong legal ties stem from a cross default provision in the documentation for the USD5bn Global Medium Term Note Programme of NC KMG's finance subsidiary KazMunaiGaz Finance Sub B.V., under which bonds of USD1.5bn, due in 2015, were issued in July 2009, which also relates to TRG's debt.

Fitch understands that a substantial part of the cash injection is dedicated to restructuring TRG's short-term bank loans, including repayments of some loans. As a result of the contribution, TRG's net debt decreased to USD663m at end-September 2009 from USD1.4bn at end-June 2009. In addition, the previously insufficient liquidity position prior to the injection has now improved as TRG had cash of USD629m on the consolidated balance sheet at end-September 2009 against short-term debt of USD474m.

NC KMG's capital injection to TRG also mitigates the risk to the rating related to the convertible bond of TRG's main subsidiary Rompetrol Rafinare (RRC) with a nominal value of EUR570m, due in September 2010.

Netherlands-based TRG is an oil refining and marketing group, with most of its assets and operations in Romania. The company's key asset is RRC, Romania's second-largest oil refining company."