BAKU, Azerbaijan, October 6. On October 5,
S&P Global Ratings upgraded KazTransOil's (KTO) long-term
issuer credit rating to 'BBB' from 'BBB-' following an upgrade of
Kazakhstan's sovereign rating and a revision of the country's risk
assessment, the agency said.


The outlook on KTO remains stable, in line with the outlook on
its parent company, KazMunayGas NC JSC (KMG).


S&P said the upgrade reflects easing sovereign constraints
and a more favorable economic environment, which support a higher
assessment of KTO's business risk profile.


"The upgrade follows that of Kazakhstan and a revision of our
country risk assessment. In our view, the easing of sovereign
constraints and a more benign economic environment support a higher
positioning of KTO's business risk profile within our fair
category," S&P said.


The agency expects KTO to generate solid cash flow and maintain
minimal leverage in 2026-2028, supported by recurring EBITDA and
limited capital spending.


S&P forecasts KTO's adjusted EBITDA at 116 billion tenge
($255 million) in 2026, down from 149 billion tenge ($327.5
million) in 2025, before rising to 140 billion-150 billion tenge
($307.7 million-$329.7 million) in 2027-2028. The decline in 2026
is due to the absence of unusually high export revenue recorded in
2025 amid attacks on KTO's key competitor, the Caspian Pipeline
Consortium (CPC).


"From 2027, domestic tariff hikes should offset cost inflation
and a 2%-3% annual transportation volume decrease, due to a
structural decline in extraction at domestic oilfields," the agency
said.







S&P expects KTO's capital expenditure to remain limited to
maintenance and minor growth projects, including the TON-2 pipeline
expansion, and to be fully funded by existing cash. The agency
assumes no new debt under its base case.


"Combined with minimal interest and working capital needs, this
should enable healthy free operating cash flow," S&P said,
adding that KTO's dividend payouts could be reduced if investment
needs increase.


S&P also said its assessment of KTO is supported by the
company's role as a strategic infrastructure services provider in
Kazakhstan. KTO is one of the country's two oil pipeline operators,
along with CPC, and transports up to half of Kazakhstan's crude oil
while covering virtually all crude oil requirements of domestic
refineries.


The agency noted that KTO benefits from route diversification,
with domestic shipments accounting for about 40% of oil accepted in
2025, alongside higher-margin transit and export destinations.


The stable outlook reflects S&P's expectation that KTO will
maintain debt to EBITDA below 1.0x and funds from operations (FFO)
to debt above 60%. The agency assumes no new debt issuance under
its base case and expects the company's financial policy to remain
conservative.


The exchange rate used by Trend is $1 = 454.98 tenge.