S&P upgrades Gazprom

Standard & Poor's said it raised its long-term corporate credit rating on Russia-based OAO Gazprom to BB+ from BB, following an increase in state support and the $7 billion purchase of the company's treasury stock by the Russian state-owned special-purpose vehicle Rosneftegas.

The outlook is positive.

The upgrade reflects the cash payment from Rosneftegas, which, together with higher export prices, has allowed Gazprom to limit increases in year-end parent debt to about $23 billion. In particular, the company was able to prepay $8 billion of the $13 billion loan raised to finance the acquisition of Sibneft by the end of 2005, S&P said.

The upgrade did not affect the agency's performance risk assessment of Gazprom's BBB structured export notes, however. S&P said it has already factored transit risk into its assessment of Gazprom, Russia and Ukraine in maintaining profitable exports to Western Europe.

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