Qatari LNG Project Ras Laffan 3 $2.23bn senior secured bond issue assigned 'A' rating; outlook stable

This follows receipt and satisfactory review of all final transaction documentation, including legal opinions. The outlook is stable. At the same time, we assigned a recovery rating of '1' to the bonds, indicating our expectation of very high (90%-100%) recovery of principal in the event of a payment default.

RasGas 3 is a two-train (trains 6 and 7) liquefied natural gas (LNG) company in the State of Qatar (AA-/Stable/A-1+). The company is currently constructing an LNG production facility with a reported capacity of about 15.6 metric tons per annum (mtpa). RasGas 3 is about 70% owned by Qatar Petroleum (QP; foreign currency AA-/Stable/--) and about 30% owned by ExxonMobil Ras Laffan (III) Ltd., a wholly owned subsidiary of ExxonMobil Corp. (AAA/Stable/A-1+). RasGas II, which guarantees the debt of RasGas 3, is also about 70% owned by QP and 30% by ExxonMobil RasGas Inc., another wholly owned subsidiary of ExxonMobil.

"The RasGas 3 bond proceeds will be used to support the completion of offshore developments, train 7, and shared facilities such as condensate, liquefied petroleum gas (LPG), LNG tanks, and LNG and liquid berths. The proceeds will also be used to repay $2.1bn of intercompany loans and shareholder advances,"

said Standard & Poor's credit analyst Karim Nassif.

The $2.23bn bonds are structured with a three-year ($500m), five-year ($1,115m), and 10-year maturity ($615m) to be repaid from project cash flows. The proceeds from the new bonds, as well as $956m of shareholder loans from an affiliate of Exxon Mobil, make up the $3.186bn of new funding raised under Tranche 3 of the $10bn financing program originally launched in August 2005. The bonds rank pari passu with other senior debt at RasGas, including the various RasGas bonds as well as a $970m bank facility and $2.175bn in shareholder loans, due 2020. The bonds also rank pari passu with the new ExxonMobil shareholder loans.

"We believe that completion of the remaining construction at train 7, and at associated third-party terminals and ships, will in occur in the first quarter of 2010. We also factor in the likelihood of favorable natural gas fundamentals in RasGas' target markets over the next five years, reasonable spot market sales potential over the next three years, and strong operational performance," he added.