The Russian natural gas giant Gazprom, rated at BB-, has been on S&P's CreditWatch list since November 30, 2004, when the company announced its intention to bid for Yukos' prize asset.
The placement of the companies on the CreditWatch listing reflects S&P's uncertainty about their capacity to pay for the assets and to cover the ensuing tax and litigation expenses.
Standard & Poor's is worried about the purchase's possible negative implications for Gazprom's takeover deal with Rosneft and for the financial solvency of the two companies.
Yuganskneftegaz was sold off for 9.3 billion dollars. The successful bidder has paid $1.8 billion of that sum as a deposit, and is to submit the rest in January 2005. If Baikal Finance Group fails to pay for the purchase in full, Yuganskneftegaz may be subjected to nationalization, S&P says in a press release.
Rosneft's credit rating is affected by its debt following the acquisition of Yugansk and the potential risk of default, S&P notes. And Yukos, the former parent company of Yugansk which is now facing huge back tax bills, has filed lawsuits with international courts of justice to contest the selloff of its main production division. These are high-risk factors that may make international banks reluctant to release loans for Gazprom and Rosneft, both of which need extra funds to be able to follow through on their deals.
As S&P experts see it, Gazprom's and Rosneft's ratings may be raised if there is some conclusive evidence of the government's support for these companies or else if Yuganskneftegaz's tax debt is rescheduled.
They expect that the acquisition of Yugansk will give a boost to Rosneft's operations as this is one of Russia's largest and most efficient oil producers.
If it goes ahead with its Rosneft takeover deal, Gazprom will gain additional profits from the newly acquired oil asset as the domestic gas prices remain rather low in comparison with the world's.
S&P will consider the possibility of removing Rosneft from the CreditWatch list when it gets more detailed information about its capacity to pay for Yuganskneftegaz and about its planned merger with Gazprom.
