Fitch rates Gazprom notes BBB

Fitch Ratings said it assigned Gaz Capital SA's proposed loan participation notes an expected senior rating of BBB. The notes will be the 26th and 27th series issued under Gaz Capital's $30 billion debt issuance program, also rated BBB.

The notes will be issued on a limited recourse basis for the purpose of funding a loan by Gaz Capital to OAO Gazprom (BBB/stable).

Proceeds will be used for general corporate purposes.

Gazprom's ratings reflect its strong financial and operational metrics, the agency noted.

Fitch said it forecasts the group's FFO adjusted leverage to stay within the narrow range of 1.3x to 1.4x in 2012 to 2013 (1.2x in 2011) and for Gazprom to remain largely free cash flow positive in those years.

The company's solid operational profile is reflected in its large scale of operations as the leading gas producer in the world, low cost production, high reserves life and solid reserves replacement rate, Fitch said.

The group's already strong business profile would be enhanced by further geographic diversification of its gas sales through planned gas supplies to China and LNG sales, the agency noted.

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