S&P ups Novatek to stable

Standard & Poor's said that it revised the outlook on OAO Novatek to stable from negative and affirmed the BBB- long-term issuer credit and ruAA+ Russia national-scale ratings.

The outlook revision reflects the view that Novatek's financial profile has been able to absorb late-2010 acquisitions quicker than anticipated, thanks to strong operational cash flows, the agency said. Cash flows have been strong due to strong production growth, increased regulated gas prices and high price realization on exported condensate.

The ratings reflect the company's high profitability and still healthy credit metrics and its position as Russia's largest independent natural gas producer as well as the group's inherent exposure to Russian country risk, including uncertain enforcement of tax and regulations, as well as the volatile U.S. dollar-Russian ruble exchange rate, S&P said.

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