S&P rates Gazprom notes BBB-

Standard & Poor's said it assigned its BBB- rating to Gazprom International SA's $1.25 billion 7.201% structured export notes due 2020.

The transaction is the first investment-grade credit involving a Russia-domiciled issuer rated by S&P and the first structured cross-border capital markets issuance by a major Russian company. S&P assigned the transaction a preliminary rating of BBB- on July 14.

The transaction is structured as a loan from Gazprom International SA to Open Joint Stock Company Gazprom that is collateralized with current and future receivables due with respect to two current gas supply contracts between Gazexport Ltd. (the trading arm and agent of Gazprom) and NV Nederlandse Gasunie of the Netherlands and ENI SpA of Italy. The transaction uses a dual assignment structure that provides collateral for the benefit of investors in the event that Gazprom fails to make timely and full payments under the loan.

S&P said the BBB- rating assigned to the transaction is based primarily on the lengthy historical performance of Gazprom in delivering gas reliably to its Western European customers and on a set of significant incentives for it to continue doing so in the future.

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