London, November 09, 2022 — Moody’s Investors Service (“Moody’s”) has today affirmed the A1 guaranteed senior secured debt rating of Ras Laffan Liquefied Natural Gas Co.Ltd (3) (RasGas 3) and the A1 senior secured debt rating and the A2 senior subordinated debt rating of Nakilat Inc. (Nakilat). The outlook on these issuers has been changed to positive, from stable.
A full list of affected ratings is provided towards the end of this press release.
RATINGS RATIONALE
Today’s rating actions follow Moody’s 2 November 2022 affirmation of the Aa3 government bond and issuer ratings of the Government of Qatar, and change in outlook to positive, from stable. For more details, please refer to the related Qatar sovereign rating press release: https://www.moodys.com/research/–PR_470168.
The rating actions on RasGas 3 and Nakilat 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 of Qatar 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.
The baa1 BCA for RasGas 3 is affirmed and reflects: (1) RasGas 3’s strong competitive position, (2) very strong financial metrics, even in a low oil and gas price scenario, (3) generally beneficial project finance structural features, although lacking certain security interests and subject to limitations on the likely effectiveness of certain creditor protections, (4) event risk considerations, including asset concentration risk and geopolitical risk and (5) exposure to oil and gas commodity price risk. The credit quality of the bonds, as captured in our A1 rating, reflects our assessment of a high likelihood of extraordinary support from the Government of Qatar, should it become necessary.
The a3 BCA for Nakilat is also affirmed and reflects (1) the critical importance of Nakilat’s vessels to their liquefaction company charterers, (2) high quality net cash flows, underpinned by charter payments that are highly resilient and well-matched to operating costs and debt service costs, (3) financial metrics capable of supporting long tenor project finance debt, (4) generally beneficial project finance structural features, (5) certain event risk considerations including exposure to force majeure risks potentially affecting the vessels and (6) exposure to refinancing risk arising from the bullet maturities of certain facilities.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Moody’s could upgrade the ratings if the sovereign rating of the Government of Qatar was upgraded.
Moody’s could downgrade the ratings if (1) the sovereign rating of the Government of Qatar was downgraded; or (2) its assumption of high support weakens.
RATIONALE FOR THE POSITIVE OUTLOOK
The positive outlook reflects the positive outlook on Government of Qatar’s sovereign rating.
LIST OF AFFECTED RATINGS
Affirmations:
..Issuer: Ras Laffan Liquefied Natural Gas Co.Ltd (3)
….Baseline Credit Assessment, Affirmed baa1
….BACKED Senior Secured Regular Bond/Debenture, Affirmed A1
..Issuer: Nakilat Inc.
….Baseline Credit Assessment, Affirmed a3
….Senior Subordinated Regular Bond/Debenture, Affirmed A2
….Senior Secured Regular Bond/Debenture, Affirmed A1
Outlook Actions:
..Issuer: Ras Laffan Liquefied Natural Gas Co.Ltd (3)
….Outlook, Changed To Positive From Stable
..Issuer: Nakilat Inc.
….Outlook, Changed To Positive From Stable
PRINCIPAL METHODOLOGY
The methodologies used in these ratings were Generic Project Finance Methodology published in January 2022 and available at https://ratings.moodys.com/api/rmc-documents/361401, and Government-Related Issuers Methodology published in February 2020 and available at https://ratings.moodys.com/api/rmc-documents/64864. Alternatively, please see the Rating Methodologies page on https://ratings.moodys.com for a copy of these methodologies.
COMPANY PROFILES
Ras Laffan Liquefied Natural Gas Co. Ltd (3) (RL 3) operates in conjunction with its affiliate Ras Laffan Liquefied Natural Gas Co. Ltd (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 29.7 million 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).
We consider RL II-3 as a single entity from a credit perspective since all senior secured debt raised by RL II is unconditionally and irrevocably guaranteed by RL 3, and vice versa. All such senior debt raised by the companies ranks pari passu, and is secured against a project finance security package. Secured creditors also benefit from project finance structural features.
The ultimate shareholders of each of RL II and RL 3 are QatarEnergy (70%, Aa3 positive) and Exxon Mobil Corporation (30%, Aa2 stable).
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.
Nakilat is a wholly-owned subsidiary of Qatar Gas Transport Company Ltd. (Nakilat) Q.S.C. (QGTC), constituted under the laws of the Marshall Islands. Entities which are wholly-owned by the Government of Qatar own 21% of the share capital of QGTC (with an aggregate indirect economic interest of 24%).
REGULATORY DISCLOSURES
For further specification of Moody’s key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody’s Rating Symbols and Definitions can be found on https://ratings.moodys.com/rating-definitions.
For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody’s rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider’s credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the issuer/deal page for the respective issuer on https://ratings.moodys.com.
For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.
The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.
These ratings are solicited. Please refer to Moody’s Policy for Designating and Assigning Unsolicited Credit Ratings available on its website https://ratings.moodys.com.
Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.
Moody’s general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://ratings.moodys.com/documents/PBC_1288235.
The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody’s affiliates outside the EU and is endorsed by Moody’s Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody’s office that issued the credit rating is available on https://ratings.moodys.com.
Please see https://ratings.moodys.com for any updates on changes to the lead rating analyst and to the Moody’s legal entity that has issued the rating.
Please see the issuer/deal page on https://ratings.moodys.com for additional regulatory disclosures for each credit rating.
Alastair Sullivan, CFA
Vice President – Senior Analyst
Infrastructure Finance Group
Moody’s Investors Service Ltd.
One Canada Square
Canary Wharf
London, E14 5FA
United Kingdom
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454
Kevin Maddick
Associate Managing Director
Infrastructure Finance Group
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454
Releasing Office:
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