Business & Finance Club - Doha : Standard & Poor's Ratings Services said today that it has raised its long-term corporate credit rating on Qatar-based liquefied natural gas (LNG) shipping company Nakilat to 'AA-' from 'A '. The outlook is stable. At the same time, we have raised the issue ratings on Nakilat's $850 million senior secured bonds to 'AA-' from 'A ' and the issue ratings on its $300 million secured subordinated bonds to 'A ' from 'A'.

The rating actions follow that on the State of Qatar (AA/Stable/A-1 ) on July 5. The 'AA-' rating on Nakilat is based on the company's stand-alone credit profile (SACP), which we assess at 'BBB', as well as our opinion that there is an "extremely high" likelihood that the State of Qatar would provide timely and sufficient extraordinary support for Nakilat in the event of financial stress.

We consider that the Qatari government has an indirect ownership stake in Nakilat. We consequently classify the company as a government-related entity. 

Our current 'BBB' assessment of Nakilat's SACP reflects our view of Nakilat's "strong" business risk profile and "significant" financial risk profile. On May 19, 2010, Nakilat's construction program remained on track and on budget with 23 out of 25 vessels delivered under a $6.8 billion limited recourse debt program that the company signed in December 2006, and the remainder to be completed by the end of 2010.

"The stable outlook reflects our belief that Nakilat will continue to build the remaining vessels to schedule and budget, and that the company will be the exclusive provider of shipping vessels for LNG distribution for Qatar," said Standard & Poor's credit analyst Karim Nassif.

Without a material weakening in the SACP, we will not change the company's corporate and issue ratings, assuming that our view of extraordinary state support is unchanged. We would likely revise the outlook, or change the rating on Nakilat in the event of a rating action on Qatar, given our view of the "extremely high" likelihood that the state would provide timely and sufficient extraordinary support to Nakilat in the event of financial distress.