Moody's upgrades Kyivstar

Moody's Investors Service said it upgraded Kyivstar GSM JSC's corporate family rating, $266 million loan participation notes due 2009 and $175 million loan participation notes due 2012 to Ba3 from B1.

The outlook is positive.

The agency said the upgrade reflects the company's ongoing strong financial and operational performance, leading market share in the context of a vigorous competitive environment, free cash flow generation during the first nine months of 2006 and modest total debt-to-EBITDA ratio of 0.5x. As of Sept. 30, Kyivstar had $473.1 million in cash and cash equivalents.

At the same time, Moody's said the Ba3 rating reflects a degree of near-term uncertainty due to the unresolved shareholder disputes between Alfa Group and Telenor ASA and the company's financial policies, particularly with regard to potential shareholder distributions.

The positive outlook relies on Moody's expectation of the company's continued robust operational and financial performance and the company's maintenance of its existing conservative financial policy notwithstanding limited visibility regarding potential shareholder distributions.

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