Standard & Poor’s Ratings Services has assigned its ‘B+’ rating to the US$5bn notes programme under which Gaz Capital SA (unrated), a Luxembourg-based finance company, will issue senior unsecured loan participation notes for the sole purpose of financing loans with matching terms and conditions to Russia-based OAO Gazprom (Gazprom; B+/Positive/–), the world’s largest gas company.
Noteholders will be relying solely on the credit and financial standing of Gazprom for servicing of the notes.
“The rating on the notes mirrors Standard & Poor’s ‘B+’ long-term corporate credit rating on Gazprom, which takes into account the company’s role as the owner and operator of essentially all exploration, production, processing, transportation, and export assets in Russia’s natural-gas sector, as well as its privileged position as a supplier to the large and growing Western European natural-gas market,” says Standard & Poor’s credit analyst Eric Tanguy.
The rating on Gazprom remains constrained by the continued strongly adverse pricing regime in Russia, as well as by the company’s high financial leverage and short-term debt, dependence on Ukraine for access to export markets, and expected major capital-expenditure requirements to maintain production and the export-pipeline infrastructure.
The outlook on Gazprom is currently positive. “Any future ratings upgrade of Gazprom will depend on improvements in domestic price conditions and the company’s efforts to spread out debt maturities and reduce its short-term financial obligations,” adds Tanguy.
Proceeds from the programme will be used for general corporate purposes.