Fitch Ratings has affirmed Tunisian oil and gas company “Entreprise Tunisienne d’Activites Petrolieres” (ETAP) National Long-term rating at ‘AA-(tun)’ with Negative Outlook and National Short-term rating at ‘F1+(tun)’.
ETAP is a wholly-state-owned company with the specific status of a business-oriented public entity, commonly known as an EPNA.
ETAP’s Negative Outlook reflects the pressure on its shareholder’s ratings (the Tunisian sovereign; ‘BB+’/Negative). Fitch applies its parent-subsidiary rating linkage methodology to ETAP’s ratings, notching it one notch down from its parent. ETAP represents the Tunisian state’s interests in the domestic upstream oil & gas sector and plays a strategic role in assuring the country’s supply in oil & gas. Fitch believes that the links remain strong despite the downgrade of Tunisia’s ratings in December 2012.
As ETAP’s liquidity is dependent on the state trade compensation mechanism and cash injections to support capital expenditure, any sign of a lack of state support or financial pressure from the state would justify a wider notching (currently capped at one notch) between the state’s and ETAP’s ratings.