‘The Big Three’ have all downgraded Gazprom, but China’s Dagong ratings agency recently issued the company its highest rating
Standard & Poor’s rating agency today downgraded Russia’s state-owned oil and gas giant Gazprom (ticker: OGZPY) and a number of other major Russian companies, joining Moody’s and Fitch in a series of credit downgrades directed at the Russian oil and gas industry.
S&P dropped Gazprom’s foreign currency ratings to BB+/B from BBB-/A-3 and local currency ratings to BBB-/A-3 from BBB/A-2, with negative outlooks. The rating agency said that its decision to lower the credit ratings of the Russian companies was due to their role and links with the Russian state, which the company also recently downgraded to BBB-/A-3, according to the company’s report.
The news follows similar decisions from Moody’s on January 20, and Fitch on January 13, in which both companies decided to lower the credit rating of Gazprom and other Russian oil and gas majors like Rosneft (ticker: RNFTF). Both companies echoed the S&P decision, saying fears about the weakening of the overall Russian economy and the possibility of government intervention if the economy continues to deteriorate led to their decision to downgrade Gazprom and its peers.
Big Three downgrades ‘are politically motivated’ – President, Dagong Global rating agency
Guan Jianzhong, president of China’s Dagong Global rating agency, told Russian news agency TASS in an interview on Wednesday that he thought the ratings downgrades by the Big Three U.S. credit agencies were politically motivated, and disregards the real state of the country’s economy.
“We believe that the downgrades of Russia’s rating by the Big Three rating agencies … are politically motivated,” Jianzhong said. “I believe there are no preconditions for these downgrades.” According to Dagong’s president, the economic conditions in Russia are being caused by outside factors like sanctions, and Russia’s economic development is normal.
Dagong upgraded Gazprom to its highest credit rating, AAA, on February 2. The agency said that its rationale for this decision was based on Gazprom’s “extremely strong wealth creation capability, and the very low degree of deviation between its available repayment sources and wealth creation capability.” The upgrade was accompanied by a “stable” outlook for Gazprom’s long-term credit rating over the next 1-2 years.
China’s Upgrade Clears the Way for Gazprom to List on the Hong Kong Stock Exchange
Jianzhong also said Russia’s “shift to the East” strategy will open broad prospects for the company in the Asia-Pacific region, reports TASS. “This will allow Gazprom to stabilize and improve its mid-term and long-term profitability,” he said. Jianzhong went on to say that the European Union would not target Gazprom with further sanctions due to their dependence on the Russian major for their gas supply.
Dagong is one of China’s leading rating agencies and its ratings are recognized by the Chinese government. The upgrade to AAA allows Gazprom to list its stock in Hong Kong, a tremendous boon for the company after it was cut off from Western investment due to the current sanctions regime in place targeting Russia for its actions in Ukraine.
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