S&P affirms Transneft

Standard & Poor's said it affirmed the BBB long-term corporate credit rating on OAO AK Transneft.

The outlook is negative.

The rating is capped by the long-term foreign-currency rating on the Russian Federation (foreign-currency BBB/negative/A-3; local-currency BBB+/negative/A-2; Russia national scale ruAAA).

"Because the Russian government owns Transneft and the company is subject to Russia's transfer and convertibility risks, our rating on the company cannot be higher than those on the sovereign," S&P analyst Andrey Nikolaev said in a statement.

Transneft's standalone credit quality largely reflects favorable regulation and tariff setting, the agency said.

The company also benefits from a strong operating profile, historically cautious financial management and highly competitive costs compared with those of shipping alternatives, the agency noted.

Constraints include Transneft's exposure to foreign exchange risk arising from a large portion of dollar-denominated debt and risks associated with the company's multibillion dollar capital projects, S&P said.

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