Sistema wins "B" long-term rating in upgrade from S&P

Standard&Poor's, the international business rating agency, has raised the long-term credit rating of Sistema from B- to B, citing improved liquidity and the success of Sistema's telecommunications business. As Rosbalt was told by S&P's Moscow office, it has also raised the long-term credit rating of Moscow City Telephone Network (MTGS) from B- to B (on the national scale from ruBBB+ to ruA). At the same time, the rating agency reconfirmed its long-term credit rating for Mobile TeleSystems (MTS) and its preferred unsecured debts to B+. The agency described the ratings' outlook for the three companies as stable.

'The main reasons for the ratings' upgrade for Sistema are an improvement in the company's midrange liquidity, a lowered refinancing risk with the issuance of USD 350 million in Eurobonds and the group's recent sale of its oil assets, which brought in a net of about USD 153 million,' said Pavel Kochanov, an S&P analyst. Moreover, the agency noted that Sistema's holdings in MTS (50.6%) and MTGS (55.6%) remain adequate to cover its unconsolidated debt.

Sistema owns and operates more than 200 companies in the fields of telecommunications, electronics, insurance, radio technology, real estate, construction, trade, media and finance. Its principal stockholder is Vladimir Evtushenkov, who is chairman of its board of directors.