London, 17 February 2011 -- Moody's Investors Service has today taken a number of rating actions affecting
certain government-related issuers ("GRIs") in Qatar, which
conclude Moody's review process initiated on 22 March 2010. These
rating actions affect the instrument ratings of debt facilities raised
by Ras Laffan 1, Ras Laffan II, Ras Laffan 3 and Nakilat (the
full names of these issuers are listed below).
Today's rating actions consist of a one notch downgrade for all
ratings of these issuers, which is in line with the likely outcome
that was set out in our March 2010 press release announcing the review.
Following today's rating actions the senior ratings listed below are positioned
one notch below that of the Qatari government itself, and reflect
strong underlying credit performance combined with our expectation that
support from the Qatari government would be forthcoming in the great majority
of any potential future stress scenarios, recognising the strategic
importance of these issuers to the State of Qatar.
Ras Laffan Liquefied Natural Gas Company Limited ("Ras Laffan 1"):
- Instrument rating for the USD800 million 8.294%
amortising senior secured bonds due 2014: downgraded to Aa3 / stable
from Aa2.
Ras Laffan Liquefied Natural Gas Company Limited (II) ("Ras Laffan II"):
- Instrument rating for the USD1,400 million 5.298%
Series A senior secured amortising bonds due 2020: downgraded to
Aa3 / stable from Aa2.
Ras Laffan Liquefied Natural Gas Company Limited (3) ("Ras Laffan 3"):
- Instrument rating for the USD850 million 5.838%
Series B senior secured amortising bonds due 2027: downgraded to
Aa3 / stable from Aa2.
- Instrument rating for the USD750 million 5.832%
Series C senior secured amortising bonds due 2016: downgraded to
Aa3 / stable from Aa2.
- Instrument rating for the USD800 million 6.332%
Series D senior secured amortising bonds due 2027: downgraded to
Aa3 / stable from Aa2.
- Instrument rating for the USD500 million 4.5% Series
E senior secured bullet bonds due 2012: downgraded to Aa3 / stable
from Aa2.
- Instrument rating for the USD1,115 million 5.5%
Series F senior secured bullet bonds due 2014: downgraded to Aa3
/ stable from Aa2.
- Instrument rating for the USD615 million 6.75%
Series G senior secured bullet bonds due 2019: downgraded to Aa3
/ stable from Aa2.
Nakilat Inc. ("Nakilat"):
- Instrument rating for the USD850 million 6.067%
senior secured bonds due 2033 (the "Nakilat Senior Bonds"): downgraded
to Aa3 / stable from Aa2.
- Instrument rating for the USD300 million 6.267%
subordinated second priority secured bonds due 2033 (the "Nakilat Subordinated
Bonds"): downgraded to A1 / stable from Aa3.
RATINGS RATIONALE
On 22 March 2010 Moody's had placed these ratings on review for
possible downgrade to consider their consistency with an evolving view
that was reflected in certain precedent rating actions - for example,
Mubadala Development Company PJSC downgraded to Aa3/stable from Aa2 on
4 March 2010 - which had introduced a moderate distinction between
the rating of the GRI and that of the supporting sovereign. During
the review period, Moody's has taken further similar rating actions
in instances where we deemed support to be high (leading to multi-notch
uplift from the GRI's baseline credit assessment), but where no
explicit guarantee existed obligating the government to support the relevant
GRI if it was to become distressed - for example, PSA International
Pte Ltd and PSA Corporation Ltd downgraded to Aa1/stable from Aaa on 16
September 2010.
Our rating methodology Government-Related Issuers: Methodology
Update, published in July 2010 (the "GRI Methodology") provides
additional guidance on the circumstances in which it would be appropriate
for Moody's to rate a GRI at par with the supporting government,
where the baseline credit assessment is materially lower (more than three
notches) than the rating of its government sponsor. During the
recent global credit crisis, the governments of certain countries
have signalled priority to protecting their balance sheets, potentially
at the expense of GRIs, and this has led us to be somewhat more
cautious in the area of support assumptions.
Although there may be exceptions, GRIs most suited for a par rating
would typically benefit from either (i) a special status, conferring
the strategic importance of their role and offering elements of protection
such as a carve-out from normal bankruptcy procedures; or
(ii) a pledge of financial resources commensurate with their role;
or (iii) other pledges in the form of capital replenishment, backstopping
of operating losses or legal provisions transferring GRI debt obligations
to the government upon dissolution. Formal contractual arrangements
of this sort do not apply to any of Ras Laffan 1, Ras Laffan II,
Ras Laffan 3 or Nakilat.
The Government of Qatar has expressed strong support for these GRIs to
Moody's, and we have concluded that the likelihood of extraordinary
support is high for each of them. However, for consistency
with our rating approach for other GRIs we have also concluded that it
is appropriate for us to introduce a distinction between the senior ratings
of these issuers and those of the government, which has resulted
in the downgrades to the instrument ratings listed above.
We note, however, that the standalone credit quality of each
of Ras Laffan 1, Ras Laffan II, Ras Laffan 3 and Nakilat is
very robust, and each of them continues to perform strongly at the
standalone level, which is reflected in our baseline credit assessments
for these issuers - i.e. these rating actions do
not arise from any deterioration in the standalone performance or prospects
of these issuers.
The last rating action for Ras Laffan 1 was implemented on 22 March 2010,
when Moody's placed the ratings of Ras Laffan 1's bonds on review for
possible downgrade.
The last rating action for Ras Laffan II was implemented on 22 March 2010,
when Moody's placed the ratings of Ras Laffan II's Series A bonds on review
for possible downgrade.
The last rating action for Ras Laffan 3 was implemented on 22 March 2010,
when Moody's placed the ratings of Ras Laffan 3's Series B, C,
D, E, F and G bonds on review for possible downgrade.
The last rating action for Nakilat was implemented on 22 March 2010,
when Moody's placed the ratings of the Nakilat Senior Bonds and the Nakilat
Subordinated Bonds on review for possible downgrade.
The ultimate shareholders of Ras Laffan 1 are Qatar Petroleum (63.0%,
rated Aa2/stable), Exxon Mobil Corporation (25.0%,
rated Aaa/stable) and Korea Gas Corporation (5.0%,
rated A1/stable), with the balance held by certain Japanese companies.
The ultimate shareholders of each of Ras Laffan II and Ras Laffan 3 are
Qatar Petroleum (70%) and Exxon Mobil Corporation (30%).
Nakilat is a wholly-owned subsidiary of Qatar Gas Transport Company
Ltd. (Nakilat) Q.S.C..
The principal methodologies used in this ratings were "Government-Related
Issuers: Methodology Update" published in July 2010, and "Generic
Project Finance Methodology" published in December 2010.
REGULATORY DISCLOSURES
Information sources used to prepare the credit ratings are the following:
parties involved in the ratings, parties not involved in the ratings,
public information, confidential and proprietary Moody's Investors
Service information, and confidential and proprietary Moody's
Analytics information.
Moody's Investors Service considers the quality of information available
on the issuer or obligation satisfactory for the purposes of maintaining
a credit rating.
The ratings have been disclosed to the rated entities or their designated
agents and issued with no amendment resulting from that disclosure.
Moody's Investors Service may have provided Ancillary or Other Permissible
Service(s) to the rated entity or its related third parties within the
three years preceding the Credit Rating Action. Please see the
ratings disclosure page www.moodys.com/disclosures on our
website for further information.
Moody's adopts all necessary measures so that the information it uses
in assigning a credit rating is of sufficient quality and from sources
Moody's considers to be reliable including, when appropriate,
independent third-party sources. However, Moody's
is not an auditor and cannot in every instance independently verify or
validate information received in the rating process.
Please see ratings tab on the issuer/entity page on Moodys.com
for the last rating action and the rating history.
The date on which some Credit Ratings were first released goes back to
a time before Moody's Investors Service's Credit Ratings were fully digitized
and accurate data may not be available. Consequently, Moody's
Investors Service provides a date that it believes is the most reliable
and accurate based on the information that is available to it.
Please see the ratings disclosure page on our website www.moodys.com
for further information.
Please see the Credit Policy page on Moodys.com for the methodologies
used in determining ratings, further information on the meaning
of each rating category and the definition of default and recovery.
London
Andrew Davison
Senior Vice President
Infrastructure Finance Group
Moody's Investors Service Ltd.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
London
William Coley
VP - Senior Credit Officer
Infrastructure Finance Group
Moody's Investors Service Ltd.
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SUBSCRIBERS: 44 20 7772 5454
Moody's Investors Service Ltd.
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Moody's concludes review of certain Qatari government-related issuers
