At the same time, Standard & Poor’s affirmed its ‘ruAA-‘ Russia national scale rating on Sibneft.
The rating on Sibneft continues to reflect the company’s exposure to oil price fluctuations and the general risks of the Russian oil industry. The company is exposed to a structurally unstable and tightening tax regime that results in lower Ebitda per barrel realisations in comparison with that of international peers. The rating is supported, however, by the company’s high cash-generating capacity, comfortable reserve life, vertical integration into refining, and favourable financial position.
“The positive outlook continues to reflect the expectation that Gazprom should become Sibneft’s 75% shareholder,” says Standard & Poor’s credit analyst Elena Anankina. “Once that transaction is complete, the rating on Sibneft could be raised by one notch to ‘BB’, reflecting the perceived diminution of the risk of sovereign interference or country-related risk once the Russian state in effect controls Sibneft through Gazprom.”
Standard & Poor’s will consider the relative status of Sibneft’s creditors compared with those of Gazprom, and Sibneft’s future strategic importance to and integration within the Gazprom group, before it considers equalizing the ratings on the two companies.
The outlook on Gazprom is also positive, suggesting an opportunity for an upgrade, likely to ‘BB+’. It is therefore likely that the rating on Sibneft will remain one notch below that on Gazprom in the medium term.