MOSCOW, September 22 (RIA Novosti) - The rating agency Standard and Poor's (S&P) has placed the credit rating of railway monopoly Russian Railways (RZD) on CreditWatch, the agency announced Thursday.
The state-owned company has an S&P rating of BB+, with a positive outlook, reflecting the company's "improving business profile".
"RZD has benefited from continued growth in national demand for rail transportation, driven by economic development and an improving regulatory framework," S&P's credit analyst Eugene Korovin said in the agency's statement.
"RZD's operating efficiency is expected to benefit in the medium term from the anticipated transfer of loss-making rail-passenger operations to a directly state-owned company and the gradual replacement of existing cross-subsidies from the freight segment with budget allocations from the state," he said.
The agency's analysts said that the company will be removed from the CreditWatch list "once a full review of RZD has been undertaken, including a review of the company's audited financial statements under IFRS for 2004."
The agency said that it is "likely to upgrade the corporate credit rating on RZD to BBB- if 2004 IFRS financial information reveals no unexpected negative trends and provided the quality of the accounting data is satisfactory."
"RZD's current financial profile is adequate but is expected to deteriorate in the medium term owing to the funding of large capital projects. It should still, however, remain compatible with a low investment-grade rating," the statement said.
