S&P lifts Sistema

Standard & Poor's said it raised the long-term corporate credit rating on Sistema (JSFC) to BB from BB-. The outlook is stable.

The agency assigned a recovery rating of 4 to subsidiary Sistema Capital SA's unsecured debt issues guaranteed by Sistema.

S&P upgraded the long-term rating on Sistema's 52.8% subsidiary Mobile Telesystems (OJSC) to BB from BB-. The outlook is positive.

"The upgrade of Sistema reflects the continuing strong performance of its core telecoms assets, moderating financial policy and tangible progress in streamlining operations and strengthening the corporate structure," S&P analyst Alexander Griaznov said in a written statement.

The rating on Sistema is constrained by the group's relatively aggressive financial policy, with a strong focus on business growth, predisposition to acquisitions and limited cash flow diversification, exacerbated by the cash consumption of many of its growth-oriented business segments, the agency noted.

Sistema's consolidated debt as of April 1 is about 1.7 times consolidated EBITDA.

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