Moody's upgrades Southern Telecommunications

Moody's Investors Service said it upgraded OAO Southern Telecommunications' corporate family rating to B1 from B3, assigned a B1 probability-of-default rating to the company and withdrew its Caa1 issuer rating. Additionally, Moody's Interfax Rating Agency assigned an A2.ru long-term national scale credit rating to the company.

The outlook is stable.

The agency said the upgrade follows a review of the group's operating performance and a reassessment under Moody's government-related issuer rating methodology. Southern Telecommunications is part of the Svyazinvest group, an entity 75% owned by the Federal Agency on Management of Federal Property and 25% owned by JSFC Sistema, and Moody's believes that the various telecommunications holdings of Svyazinvest are regarded as strategic holdings by the Russian government.

The reassessment resulted in an upgrade of the company's baseline credit assessment to 16 from 17, which reflects Moody's assessment of Southern Telecommunications independent of any benefit the corporate family derives from being a government-related issuer and benefits from the company's position as an incumbent fixed line operator in the Southern Federal District, and a change in the support factor to medium from low, the agency said.

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