S&P: Gazprom outlook stable

Standard & Poor's said it revised the outlook on OAO Gazprom to stable from negative and affirmed its BBB long-term and A-3 short-term corporate credit ratings.

"The outlook revision reflects Gazprom's stabilizing standalone performance, as we expect stronger cash flow and moderating acquisitions in 2010 to help the company deleverage," S&P analyst Elena Anankina said in a statement.

Ratings are based on an assessment of the group's business profile as satisfactory and the financial risk profile as significant, resulting in a standalone credit profile consistent with BB+ credit quality, the agency said.

Gazprom benefits from vast proven reserves, massive production, vertical integration and a solid European market share, the agency said.

Constraints include large debt with significant short-term debt and a track record of aggressive acquisitions, S&P said. On Dec. 31, 2009, Gazprom's adjusted debt was RUB 1.557 trillion, versus EBITDA of RUB 1.1312 trillion.

The stable outlook reflects expectation that Gazprom will be able to broadly finance capital expenditures and dividends from funds from operations rather than by increasing adjusted debt and moderate acquisitions in 2010 and 2011, according to the agency.

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