S&P lifts Eurasia Drilling, rates eurobond BB+

Standard & Poor's said it raised its long-term corporate credit rating on Eurasia Drilling Co. to BB+ from BB and affirmed the B short-term rating. The outlook is stable.

At the same time S&P raised its Russia national scale ratings on Eurasia Drilling to ruAA+ from ruAA.

S&P also assigned a BB+ issue rating to Eurasia Drilling's proposed eurobond. The 3 recovery rating on this bond indicates an expectation of meaningful (50%-70%) recovery in the event of a payment default.

"The upgrade reflects our expectation that the company will retain healthy credit metrics in the medium term, thanks to the group's moderate financial policy and growing profits. We believe that the group should further benefit from growing demand for drilling services in Russia's core oil provinces and in the Caspian basin, so that the company's increase in capital expenditures should help increase profits and cash flows," S&P said in a news release.

The rating reflects S&P's assessment of the company's financial risk profile as "intermediate" and business risk profile as "fair."

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