Fitch affirms Novatek

Fitch Ratings said it affirmed OAO Novatek's long-term foreign- and local-currency issuer default ratings and senior unsecured ratings at BBB-, national long-term rating and national senior unsecured ratings at AA+(rus).

Novatek Finance Ltd.'s foreign-currency senior unsecured debt rating also was affirmed at BBB-.

The outlook is stable.

The actions follow news that Novatek it will acquire a 49% stake in ZAO Nortgaz for $1.375 billion in a fully debt-funded transaction. Novatek expects to close the transaction in 2012.

The transaction is likely to see leverage metrics breach the parameters that the agency has set out for a downgrade, if sustained. But, the breach will be by only a modest amount, Fitch said, and based on conservative forecasts and past behavior, Fitch said it expects that metrics will return to more comfortable levels for the ratings in one to two years.

Until this happens, Novatek's capacity to undertake further acquisitions without jeopardizing the rating will be limited, the agency said.

The acquisition is expected to strengthen Novatek's position in the Russian gas market, Fitch said, and bring synergy benefits.

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