Fitch Ratings has assigned Kazakhstan-based electricity and heat generator and distributor Joint Stock Company Sevkazenergo (Sevkazenergo), a Long-term foreign currency IDR of 'BB-' with Stable Outlook. A full list of ratings actions is at the end of this comment.
Sevkazenergo's ratings are aligned with those of its sole shareholder, Joint Stock Company Central-Asian Electric-Power Corporation (CAEPCo, BB-/Stable), reflecting its position as one of two key operating subsidiaries within the CAEPCo group, contributing 37% of group EBITDA. The rating reflects Sevkazenergo's vertical integration, stable regional market share and access to cheap regulated coal supplies.
Sevkazenergo covers electricity and heat generation, distribution and supply in Petropavlovsk regions, which is responsible for about 3% of electricity generation in Kazakhstan. Despite integration, Sevkazenergo's EBITDA is dominated by generation services, which accounted for about 94% of company's EBITDA in 2014.
Fitch anticipates Sevkazenergo to continue generating healthy cash flows from operations of around KZT8bn on average for 2015-2018.