Fitch rates Gazprom notes BBB

Fitch Ratings said it upgraded OAO Gazprom's long-term foreign- and local-currency issuer default ratings to BBB from BBB-, along with its senior unsecured rating to BBB from BBB- and Gaz Capital SA's $30 billion debt issuance program to BBB from BBB-.

The agency also assigned its proposed loan participation notes issue under the program an expected BBB rating. The notes will be issued in two series nominated in dollars and used to finance a loan to OAO Gazprom. The noteholders will rely on Gazprom's credit and financial standing for the payment obligations under the notes. The final rating is contingent on receipt of final documents.

The outlook has been changed to stable from positive.

The upgrade reflects an improved financial profile based on 2006 financial results and nine-month results from 2007, including a return to a positive free cash flow for the first time in five years, Fitch said.

The upgrade also reflects the strengthening of main credit metrics in 2006, including a net debt-to-EBITDAR ratio of 0.9x, the agency said.

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