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Published on 6/17/2010 in the Prospect News Emerging Markets Daily.

S&P watches Southern Telecommunications merger

Standard & Poor's said it placed Southern Telecommunications Co.'s global scale B long-term corporate credit rating and ruA- Russia national scale rating on CreditWatch with developing implications.

The watch placement reflects the uncertainties triggered by the company's decision to reorganize in order to be merged into OJSC Rostelecom, which has BB ratings and a stable view.

The agency said it is particularly concerned about the potential impact of reorganization on the company's liquidity position which, if it deteriorates, could put downward pressure on the ratings.

A merger of Southern Telecommunications into the larger Rostelecom entity is a positive, S&P said, assuming the absence of any technical or actual liquidity concerns coming out of the reorganization process.


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