S&P: UES outlook developing

Standard & Poor's said it revised its outlook on state-controlled RAO UES of Russia to developing from stable and affirmed its B+ long-term corporate credit and ruA+ Russia national scale ratings.

The outlook revision reflects the large uncertainty concerning the forthcoming reorganization of UES as part of the reform process of the Russian power sector. During restructuring, most of UES' assets will be separated to become independent players in the target deregulated markets, the agency said.

Company subsidiaries and possibly some liabilities of the holding company could be spun off from the group, or the holding company could be liquefied and its stakes in subsidiaries allocated among shareholders.

These risks are offset by UES' low debt and strong cash flow protection and by the group's strong market and competitive positions in the Russian power sector, the agency said.

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