Moody's Downgrades Russian Gazprom's Foreign, Local Currency Ratings

MOSCOW/LONDON, January 20 (Sputnik) — Moody's Investors Service on Tuesday downgraded the foreign- and local-currency ratings of Russian energy giant Gazprom following its recent downgrade of Russia's government bond rating, the agency said.

Gazprom's foreign-currency ratings were lowered to Baa3 from Baa2, and local-currency ratings to Baa2 from Baa1.

"Today's rating action on Gazprom has been prompted by (1) the weakening of Russia's credit profile, as captured by Moody's downgrade of the sovereign to Baa3 from Baa2; (2) concerns that, given current economic conditions, the probability of negative government intervention has increased in Gazprom's business operations; and (3) the possibility that the company's operations may become less insulated from potential sovereign stress," the agency said in a statement.

Also on Tuesday, Moody's Investor Service downgraded the issuer ratings of Russia's largest oil pipeline company Transneft and Federal Grid Company of Unified Energy System (FGC UES) from Baa3 to Baa2.

"Today's action follows the weakening of Russia's credit profile, as reflected by Moody's downgrade of Russia's government bond rating to Baa3/Prime 3 (P-3) from Baa2/Prime 2 (P-2) on Friday 16 January and its placement of the rating on review for further downgrade," the agency noted.

On Monday, Moody's Investors Service downgraded the long- and short-term ratings of three major Russian lenders following its recent downgrade of Russia's government bond rating.

The list comprises Russia's largest lender Sberbank, as well as Vnesheconombank and the Agency for Housing Mortgage Lending OJSC.

On January 16, Moody's downgraded Russia's government bond rating to Baa3 from Baa2 and placed it under review for further a downgrade.

Moody’s based its decision on the fact that Russia’s economy had been affected by “severe oil price and exchange rate shock”, saying that these factors may further undermine the prospects for the country’s economy growth.

The Russian economy is now facing a backlash from Western sanctions that were imposed on Moscow over Ukraine, although the Kremlin has repeatedly denied any involvement in the country's internal crisis. Another reason for the downturn is a sharp decline in oil prices, as Russian budget is highly dependent on energy exports.

Last week, Russian Economic Development Minister, Alexei Ulyukayev, said negative assessments by foreign rating agencies were unlikely to have any serious macroeconomic consequences for Russia.