Standard & Poor’s Ratings Services has affirmed its ‘B’ long-term corporate credit and senior unsecured debt ratings on Russia-based OJSC Oil Company Rosneft, following the company’s successful renegotiation of covenants on its bank debt. The outlook is negative.

“Standard & Poor’s ratings and outlook on Rosneft already incorporated the expectation that the company would be able to avoid technical default on its financial obligations,” says Standard & Poor’s credit analyst Elena Anankina. “Beyond the covenant renegotiation, the ratings continue largely to reflect the company’s aggressive investment and financial policy.”

Rosneft’s fair liquidity benefits from the successful renegotiation of financial debt covenants and from improving access to international and domestic financing for Russian borrowers, supported by the country’s economic progress. In the mid to long-term, however, access to finance for all Russian corporates, including Rosneft, is going to be volatile, reflecting fluctuating demand for emerging market debt on the international financial markets.

Rosneft is increasing its debt and making significant capital expenditures and mergers and acquisitions at a time when oil prices are at abnormally high levels, and the company might face difficulties repaying debt when oil prices decrease, which is expected by Standard & Poor’s.