S&P rates Federal Grid bonds A+

Standard & Poor's said it assigned its A+(ru) Russia national-scale rating to the proposed Russian ruble 7 billion senior unsecured bonds due 2008 to be issued by Federal Grid Co. of the Unified Energy System (FGC, B+/positive, A+(ru)).

The agency noted the Russia national-scale rating on the bonds is the same as that on FGC and that the ratings on FGC are constrained by those on its 100% owner RAO UES of Russia (B+/Developing, A+(ru)), which has a lower stand-alone credit quality and from which FGC is not fully ring-fenced.

"FGC will likely to be legally separated from the RAO UES group within the next three years, as part of reforms to the Russian power sector," said S&P credit analyst Eugene Korovin.

"Uncertainty remains, however, over the restructuring plan, which may have negative implications for FGC's stand-alone credit quality."

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