Fitch Ratings has today revised the Rating Watch of Turkish oil refiner Tupras' Senior Unsecured foreign currency B rating to Evolving from Negative. At the same time, the Senior Unsecured local currency BB+ rating remains on Rating Watch Negative, stated a press release.
The rating action follows the upgrade of Turkey's foreign currency sovereign rating to B+ with Stable Outlook. The Rating Watch Evolving indicates that the rating may be raised, lowered or maintained. However, the agency believes that it is more likely that the foreign currency rating will be upgraded than downgraded or affirmed and that it will continue to converge with Tupras' local currency rating, to the extent allowed by the sovereign ceiling.
Both ratings were placed on Rating Watch Negative in January after the final privatization bids for a 66 percent stake in Tupras were submitted, with OAO Tatneft as one of the bidders. The key uncertainty stemming from the privatization is the possibility and extent to which Tupras will be required to directly or indirectly co-finance the acquisition price.
The co-financing could generally be done though a substantial dividend, loans to new shareholders, change in the crude oil or export procurement, or through other structured mechanism.
Subsequent effect on profitability, cash flows and balance sheet will be analyzed and compared to the previously projected levels. Further issues to be clarified include possible management, corporate governance, strategy changes as well as identification of possible synergies between the new shareholders' operations and Tupras.
The recent performance of the Turkish economy, new Petroleum Market Law and continued strength of Tupras' financial profile still constitute Tupras' strengths. Fitch will make further announcement as soon as the stand-alone credit profile of Tupras is reviewed and, most importantly, details of the privatization transaction known and the effects on Tupras' credit profile analyzed. — (menareport.com)
© 2004 Mena Report (www.menareport.com)
