07 June 2004 06:56
S&P assigns `B` ratings to Russian Federal Grid Co.
MOSCOW. June 7 (Interfax) - Standard & Poor's Ratings Services has assigned its 'B' long-term
foreign and local currency corporate credit ratings to Russia-based electricity transmission grid operator Federal Grid
Co. of the Unified Energy System (FGC), the agency said in a press release Monday. The outlook is positive.
"The ratings on FGC reflect the company's exposure to the risk of
operating in a transition economy in Russia, FGC's and the Russian
regulator's short operating track records, and the company's
The ratings on FGC are constrained by the rating of its 100% parent, the electricity utility RAO UES of Russia, which
has a lower stand-alone credit quality from which FGC is not fully ring-fenced.
medium term. At year-end 2003, FGC had no debt. The company will,
however, incur new debt from its capital expenditure program. As a
The positive outlook reflects the outlook on FGC's parent company
RAO UES. Standard & Poor's expects that RAO UES will benefit from
significant--partly debt-financed--investment needs," said Standard & Poor's credit analyst Magnus
Pettersson. "These weaknesses are tempered, however, by FGC's position as the monopoly electricity
transmission operator in Russia, which helps generate stable cash flows."
The ratings are also supported by the company's currently very low financial debt leverage, although debt is
expected to increase over the
result of the planned capital-spending program, FGC's debt leverage is expected to increase.
increased transparency and reduced political intrusion in the Russian regulatory environment, on the back of
Russia's continued political and economic development.
"The ratings of FGC could be positively affected by final transfer of ownership directly to the Russian
government or further proof of effective ring-fencing arrangements," added Pettersson. [RU ASIA EUROPE EEU EMRG ENR
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[Interfax] |
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