According to Standard & Poor's credit analyst Elena Anankina, the move reflects the increasing risk of a liquidity crisis at YUKOS, adding to uncertainties about taxes, ownership rights over key cash-generating assets, and governance due to the mounting political pressure on the company.

A 'potential event of default' restricts the company's ability to raise funding and withdraw cash from exporter accounts that are used to secure syndicated bank debt, and do not require immediate repayment of debt. The announcement of a potential event of default by creditors indicates their concerns and, in Standard & Poor's view, increases the chances of creditors announcing a full 'event of default'. This would trigger cross-defaults whereby all the company's financial debt becomes immediately due and payable. This would put further stress on YUKOS’s liquidity, which is already being pressured by a $3.5bn potential tax claim (the court hearing is expected in May) and by the freeze of its parent company's assets, including shares in all the company's key operating subsidiaries and in Sibneft. Under the stress scenario, if YUKOS loses the tax case or if an 'event of default' is announced by the company or its creditors, YUKOS might experience a liquidity crisis, forced sale of core assets, insolvency procedures, or effective nationalization of its assets, Standard & Poor's says.

In Ms. Anankina’s opinion, YUKOS appears to retain its ability to service its debt via product revenues and cash held at subsidiaries. "The company's ability to do so in the coming months will, however, largely depend on the course of action taken by various arms of the Russian government and by the creditors, and we will continue to closely monitor the situation," she concluded.

The ratings on YUKOS were originally placed on CreditWatch on October 31, 2003.

On Monday, Moody's Investors Service placed the Ba2 senior implied and Ba3 senior unsecured note ratings of Sibneft under review for possible downgrade. The agency said the move reflected increasing pressure on the liquidity of its 92 percent shareholder, YUKOS, and uncertainties over Sibneft's own position, should YUKOS become insolvent.

Moody's was concerned about the decision of the Moscow Arbitration Court to freeze YUKOS's assets at the request of the tax authorities who are claiming $3.5bn in unpaid taxes from the company and by the announcement that YUKOS's $1bn pre-export secured loan banking syndicate has given notice to the company of a potential event of default. The rating review will seek to determine to what extent Sibneft's ongoing ability to service its debt under current and potentially changing circumstances is still compatible with its Ba2 senior implied and Ba3 note ratings, the agency says.

Meanwhile, according to analysts at NIKoil, YUKOS’s insolvency is unlikely. “The statements made by creditors were no surprise, as the freeze of YUKOS’s assets was envisaged in the loan contract, which provides for loan reclassification in accordance with the level of risk,” NIKoil said in an analytical survey.

Analysts at the United Financial Group (UFG) agree. “No doubt, creditors have been considering this possibility over the past few days if not weeks,” they said. “If they decide that the government is not interested in YUKOS’s insolvency, the best tactic for them would be not to insist on the company’s insolvency.”

At the same time, according to Dmitry Tsaregorodtsev of the Prospect investment company, the threat of a potential default on the $1bn loan is bad news for YUKOS in the medium term perspective. With new claims being made against YUKOS, investors do not have an impression that the conflict around the embattled oil company abates. If MENATEP, to which YUKOS owes a loan of $1.6bn, and the government, which claims $3.5bn in unpaid taxes from the oil company, also go ahead with their claims, the company might go bust, the analyst believes.

On Monday, a group of commercial banks warned YUKOS of a potential default on a $1bn secured loan it took last year. This move reflects nervousness in the financial community about the company’s future. The nervousness among creditors and rating agencies was caused by a $3.5bn tax claim presented to YUKOS by Russian authorities and a court decision last month to ban any sale or transfer of assets in relation to the claim.