Global credit rating agency Moody’s has affirmed the ‘A1’ guaranteed senior secured debt rating of RasGas 3 as well as the ‘A1’ senior secured debt rating and the ‘A2’ senior subordinated debt rating of Nakilat Inc.
The outlook on these issuers has been upgraded to “positive” from “stable”, following Moody’s affirmation of the ‘Aa3’ government bond and issuer ratings of Qatar, and change in outlook to “positive” from “stable”.
The rating actions on RasGas 3 and Nakilat Inc reflect that each is a government related issuer (GRI) and that the ratings benefit from Moody’s assumption of extraordinary support, if required, from the government to avoid a default on their debt obligations, which leads to a significant uplift from the standalone credit strength, or Baseline Credit Assessment (BCA), of the projects.
RasGas 3’s ‘baa1’ BCA is affirmed, which reflects its strong competitive position, very strong financial metrics, even in a low oil and gas price scenario, generally beneficial project finance structural features, although lacking certain security interests and subject to limitations on the likely effectiveness of certain creditor protections.
It also reflected the event risk considerations, including asset concentration risk and geopolitical risk and exposure to oil and gas commodity price risk.
The credit quality of the bonds, as captured in its ‘A1’ rating, reflects Moody’s assessment of a high likelihood of extraordinary sovereign support, should it become necessary.
RL 3 operates in conjunction with its affiliate Ras Laffan Liquefied Natural Gas Company (II) (RL II), (together, RL II-3). RL II-3 engages in the upstream production of natural gas, gas treatment and liquefaction and the export of natural gas in liquid form.
RL II-3 has successfully developed five liquefied natural gas (LNG) liquefaction trains, with total nameplate capacity of 29.7mn tonnes of LNG per annum, representing approximately 7.8% of globally traded LNG in 2021. RL II-3 also produces a number of other valuable hydrocarbon byproducts, including condensates and liquefied petroleum gas (LPG).
Moody’s affirmed ‘a3’ BCA for Nakilat, reflecting the critical importance of its vessels to their liquefaction company charterers, high quality net cash flows, underpinned by charter payments that are highly resilient and well-matched to operating costs and debt service costs, financial metrics capable of supporting long tenor project finance debt and generally beneficial project finance structural features.
It also reflected certain event risk considerations including exposure to force majeure risks potentially affecting the vessels and exposure to refinancing risk arising from the bullet maturities of certain facilities.
Nakilat Inc was formed in April 2006 to be an intermediate special purpose holding company for a portfolio of wholly-owned special purpose companies, with each such company procuring the construction of an LNG carrier, and becoming that vessel’s owner following construction completion. The 25 vessels are contracted under long-term time charter party agreements with LNG liquefaction companies based at Ras Laffan Industrial City in Qatar.