S&P yesterday said it had removed its CreditWatch, with developing implications status, for Gazprom’s BB- long-term corporate credit and senior unsecured debt ratings and that the outlook for Gazprom was now stable.
Company credit analyst Elena Anankina said Standard & Poor's viewed the merger cancellation as positive and one which would significantly reduce Gazprom's exposure to the risks related to Rosneft's high leverage and weak liquidity.
At the same time S&P lowered its corporate credit and senior unsecured debt ratings for Rosneft from B to B-, reflecting Rosneft's tight liquidity and aggressive strategic and financial policies. Rosneft remained on CreditWatch, with implications now revised from developing to negative.
The Rosneft downgrade reflected S&P’s view that Rosneft's financial profile had deteriorated due to high debt levels following the recent US$9.3 billion acquisition of Yugansk.
S&P said Rosneft was continuing to negotiate waivers with holders of US$1.9 billion of its long-term loans, and that Yugansk was subject to large tax claims and litigation risks, and was in default on the guarantee it provided on US$1.3 billion of debt for previous owner Yukos.
The Kremlin this week cancelled the merger of Gazprom and Rosneft and proposed a new plan for gaining a majority stake in Gazprom. The Russian government plans to still retain its majority stake in Rosneft but sell publicly an undisclosed minority stake. The proceeds from this sale would eventually be transferred to Gazprom in exchange for its treasury stock.
