S&P assigns Gazprom notes BBB

Standard & Poor's said it assigned its preliminary BBB long-term debt rating to the proposed issue of senior unsecured loan participation notes by Gaz Capital SA, the financing vehicle of OAO Gazprom (BBB/stable).

The notes' sole purpose is to finance a loan to Gazprom, within the framework of the group's $15 billion loan participation note program, the agency said, adding that the amount and maturity are expected to be finalized during the placement.

S&P said it believes that Gazprom will use part of the proceeds to refinance the $7.45 billion acquisition of a controlling interest in the Sakhalin-II oil and gas project in Russia's Far East.

"The rating on the notes reflects the corporate credit rating on Gazprom, because Gaz Capital has ceded its right to receive all Gazprom payments in favor of the trustee, meaning that noteholders will effectively face only Gazprom's credit risk," said S&P credit analyst Elena Anankina.

The rating reflects Gazprom's satisfactory business profile, vast reserves, large scale production, solid market share in Europe and vertical integration between production and transportation, the agency added.

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