S&P: Gazprom off watch, notes rated BB-

Standard & Poor's said it removed its BB- long-term corporate credit and senior unsecured debt ratings on OAO Gazprom from CreditWatch developing and affirmed them following a statement by the Russian government that the planned merger with OJSC Oil Co. Rosneft (B-/Watch Negative/--) will not proceed. The outlook is stable.

At the same time, S&P assigned its BB- rating to the proposed senior unsecured loan participation notes issued by finance vehicle Gaz Capital SA.

S&P affirmed Gazprom's BB- corporate credit and senior unsecured debt ratings.

The proceeds are expected to be used for general corporate purposes.

S&P said the rating on the notes mirrors the corporate credit rating on Gazprom because the noteholders will rely solely on the company's credit quality for servicing the notes.

The ratings on Gazprom are constrained by adverse domestic gas price regulations in the Russian Federation (foreign currency BBB-/stable/A-3; local currency BBB/stable/A-3) and the company's leveraged financial profile and high capital expenditure needs, according to S&P.

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