Fitch Ratings assigned an expected BBB- rating to the issue by Gaz Capital S.A., a Luxembourg-based subsidiary, of a fifth tranche under the existing $15 billion loan participation note program (rated BBB-), which relies on a senior unsecured liability of Gazprom for repayment.
Fitch said the final rating for this tranche will be assigned once the tenor, amount and currency of the issue are decided.
Gazprom's natural gas sales to Europe increased 38% in 2005, primarily due to rising prices, while sales to former Soviet Union countries rose 58% on a combination of higher volumes and gas prices. Fitch said the result of higher gas prices to former Soviet republics is especially supportive of Gazprom's credit ratings, as the company, which controls 25% of the world's gas reserves, works to align previously low prices with higher European ones.
The agency said it will continue to monitor Gazprom's operating performance, especially investments being made to address the declining production levels at the company's key mature fields. Another area of concern is the company's relatively high transport infrastructure construction costs.
Moody's assigned Gazprom Eurobonds a preliminary Baa1 rating with a stable outlook.
