S&P puts Transnefteproduct on positive watch

Standard & Poor's said it placed its B+ long-term corporate credit rating on OJSC AK Transnefteproduct on CreditWatch with positive implications after the Russian president signed a decree to contribute Transnefteproduct to the charter capital of OAO AK Transneft (BBB+/stable).

The CreditWatch placement reflects the potential benefits for Transnefteproduct of a merger with a stronger entity, the agency said, adding that it also reflects likely higher ongoing and extraordinary government support.

The merger plan is consistent with the Russian government's policy aimed at strengthening the state's presence in strategic sectors such as oil and gas, the agency noted.

S&P said that, to date, the ratings on Transnefteproduct have been based on the company's stand-alone credit quality, reflecting Transnefteproduct's position as a relatively small entity that operates essentially on a commercial basis and competes with other transportation providers.

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