S&P: Rosneft, Gazprom still on watch developing

Standard & Poor's said it kept its BB- long-term corporate credit and senior unsecured debt ratings on OAO Gazprom and related entities on CreditWatch developing.

At the same time, the B long-term corporate credit ratings on OJSC Oil Company Rosneft were also kept on Credit Watch developing.

S&P said Rosneft and Gazprom remain on CreditWatch following Rosneft's announcement that its $9.3 billion acquisition of a 76.8% stake in Yuganskneftegas (not rated), a former subsidiary of OAO NK Yukos (D/--/--), was financed by a $6 billion prepayment from China National Petroleum Corp. (not rated) for crude oil to be supplied over the next five to six years and by loans from Russian banks.

The CreditWatch status of Rosneft and Gazprom reflects S&P's concerns about potentially increased leverage (particularly short-term and secured debt) following the acquisition of Yugansk, as well as major uncertainties regarding the terms of the new financing and the details of the oil supply contract with China National Petroleum.

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