International investment rating agency Standard & Poor's has increased the long-term credit rating for Gazprom from B+ to BB-, which reflects the general strengthening of the liquidity of the company. The rating's prognosis is stable.
'Thanks to several issuances of unprovided long-term obligations in 2002 and 2003, Gazprom was successful in increasing the average term of borrowing, reduce the volume of short-term obligations and reduce dependency on loans,' said Standard&Poor's Analyst Eric Tange.
The rating for Gazprom as before reflects the unprofitableness of the company's activities on the domestic market and also the fact that the company's ability to generate capital reserves and financing depends on world market prices for hydrocarbon materials. In addition, the situation in regard to liquidity remains not entirely coherent, according to a statement issued by Standard & Poor's.
Negative factors related to the rating include the unfavorable regime for regulating gas prices in Russia in spite of the improvement of the economic conditions in the country and also the high level of sensitivity of Gazprom to vacillating European prices for oil products, high level of debt and planned significant capital investments.
Gazprom fuels 8% of Russia's GDP It also accounts for around 20% of Russia's budget income and 20% of hard currency assets. 'The possibility of a further increase in the rating will depend on the dynamic of prices on the domestic market after the 20% increase in tariffs expected in 2004. The improvement of the fiscal and economic environment makes it easier to increase domestic prices for gas after the elections,' said Tange.
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