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how to use penegra express 50 KTGA's ongoing KZT86bn (USD562m at current exchange rates) modernisation programme will be partially debt-funded. We expect the company's funds from operations (FFO) gross adjusted leverage to increase from 1.3x in 2012 to 5x on average in 2013-2017 and FFO interest coverage to be in the 3x range over the same period, down from 12x in 2012. The capex covers the modernisation and extension of existing gas pipelines, and will have a moderately positive effect on the company's EBITDA through higher transportation and sales volumes and lower gas losses. We view the company's financial policy as aggressive but commensurate with the 'BB' rating category.

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