Global credit rating agency Moody's Monday affirmed the ratings of QatarEnergy, Industries Qatar (IQ) and Qatar General Electricity and Water Corporation (Kahramaa) and upgraded their outlook to "positive" from "stable".
The rating action on the government-related institutions is a direct consequence of the recent rating action on Qatar where the 'Aa3' government bond rating was affirmed, and the outlook was upgraded to "positive" from "stable".
As one of the world's leading gas exporters, Qatar's national oil and gas company, QatarEnergy, is positioned at the centre of the country's economic, social and political framework.
QatarEnergy's 'Aa3' long-term issuer rating reflects the combination of hydrocarbon major’s Baseline Credit Assessment (BCA), a measure of its standalone credit profile, of 'aa3'; the government's 'Aa3' sovereign rating with a "positive" outlook; very high dependence on; and very high support from the Qatari government.
QatarEnergy's BCA is supported by the significant scale of Qatar's proved gas reserves; its strong LNG (liquefied natural gas) franchise which had a global market share of more than 20% (for Qatar's LNG exports) in 2021; the low-cost nature of its operations as well as strong operating efficiency; and very strong financial and liquidity profiles with a track record of maintaining strong metrics over time.
IQ's 'A1' long-term issuer rating reflects its BCA of 'baa1' and a three-notch uplift, based on the assumption of very high dependence on and high support from the government.
The BCA is underpinned by IQ's strong competitive position as a low-cost producer; a very strong financial profile, with debt-to-Ebitda (earnings before interest taxes, depreciation and amortisation) below 1.0x through the cycle; and a high degree of integration and coordination between IQ and QatarEnergy, notably through board representation, shared management and QatarEnergy's control over key IQ group financial policies, as well as financial and investment decisions at the operating company level.
Long-term feedstock agreements with QatarEnergy, which give IQ a high degree of resilience to various down cycles in the sector in which it operates, substantially mitigate IQ's exposure to hydrocarbon price risk.
Moody's said Kahramaa's 'A1' long-term issuer rating reflects the standalone creditworthiness, as expressed by a BCA of 'baa1', and a very high level of dependence and sovereign support.
Kahramaa's standalone assessment is supported by a low risk profile of its power and water transmission and distribution activities; its monopoly position in Qatar; a system of government subsidies based on the recovery of costs and a fair profit margin; and a conservative financial profile, characterised by low leverage.