The rating reflects KMG International’s continued heavy reliance on its parent company, Kazakh state-run company KazMunayGas (KMG), Fitch said.
Fitch cited several key drivers for its ratings action Friday, including KMG International’s recently completed rebranding process and the company’s expansion in the retail sector.
KazMunayGas’ rebranding was complete in March this year when the group renamed what was formally known as The Rompetrol Group to KMG International NV, to more closely align the subsidiary with its parent company.
However Rompetrol, a brand born in Romania, and used in domestic and foreign gas stations, will be kept for the near future, according to the company.
“Fitch views the rebranding as significant in further integrating the Romanian business into the KMG group, but does not attach any additional support to the standalone rating beyond that already incorporated,” the statement noted.
It said KMG International plans to improve its integrated distribution (retail and wholesale) network in domestically, having completed the upgrade of its Petromidia refinery in 2012. The company will focus on the Romanian market, where it plans to open 96 new filling stations by 2017.
“In Fitch’s opinion KMG International would benefit from a greater share of the domestic market,” the rating agency said.
KMG International also plans to repurchase around 27% of Rompetrol Rafinare’s (RRC.RO) shares from the government in line with the Memorandum of Understanding entered into with the Romanian state.
Fitch expects that KMG will finance the transaction through an intercompany loan.