S&P rates Petrol Ofisi notes B

Standard & Poor's said it assigned its B long-term rating to the proposed $175 million senior unsubordinated notes of PO Oil Financing Ltd., a wholly owned subsidiary of Turkey-based oil distributor Petrol Ofisi AS (B/stable/--).

"The notes, which will mature in 2009, have the same rating as the corporate credit rating on Petrol Ofisi because they are unconditionally guaranteed by the parent company, which is also the main operating company of the Petrol Ofisi group," said S&P credit analyst Per Karlsson. "The notes are unsubordinated and unsecured obligations and will rank at least equally with all other present and future unsecured and unsubordinated obligations of the issuer and the guarantor, respectively."

S&P said the ratings on Petrol Ofisi reflect the company's significant exposure to the volatile macroeconomic environment in Turkey. The ratings are also constrained by the company's lack of meaningful geographical diversification, uncertain market conditions after planned industry deregulation, and the large amount of debt falling due in 2004 and 2005.

The ratings are supported, however, by the company's position as Turkey's leading oil products distributor, supported by an advantageous logistics network and a strong market share of contracted dealer-operated fuel retail sites. The ratings are also supported by the company's low re-contracting risk with dealers.

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