S&P rates Transneft notes BBB+

Standard & Poor's said it assigned its BBB+ preliminary long-term debt rating to the proposed seven-year senior unsecured notes to be issued by special purpose vehicle TransCapitalInvest Ltd., with the sole purpose of financing the loan to OAO AK Transneft (BBB+/stable).

The amount and interest rate, as well as other details of the issue, will be determined during the placement, the agency said.

"We expect the proceeds from the bond issue to be used to finance the construction of the Eastern Siberia-to-Pacific Ocean pipeline," said S&P credit analyst Tatiana Kordyukova.

The rating on Transneft is supported by its unique market position as the key transporter of Russia's crude oil production to domestic and export destinations, according to S&P.

As a result, the company benefits from positive government support, including supportive tariff regulation, the agency noted, adding that Transneft also benefits from a strong operating profile, historically cautious financial management and highly competitive costs compared with those of shipping alternatives.

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