Moody’s gives Ba1 to Gazprom LPNs

Moody's Investors Service said it assigned a Ba1 rating, with a loss given default assessment of LGD4 (50%), to the proposed senior unsecured CHF loan participation notes (LPN) to be issued by, but with limited recourse to, Gaz Capital SA (Ba1 on review for downgrade), a limited liability company incorporated in Luxembourg.

Gaz Capital will in turn on lend the proceeds to Gazprom PJSC (Ba1 on review for downgrade) and therefore the noteholders will rely solely on Gazprom's credit quality to service and repay the debt.

The rating is on review for downgrade.

"Today's assignment of a Ba1 rating to the notes is in line with Gazprom's Ba1 corporate family rating (CFR), which is currently on review for downgrade following deterioration in oil and gas prices. The Ba1 rating is also on par with the Russian government foreign currency bond rating, which was placed on review for downgrade on 4 March 2016," Denis Perevezentsev, Moody's vice president and lead analyst for Gazprom, said in a news release.

Gazprom's rating was placed on review for downgrade in January together with 119 other energy companies in the Americas, EMEA and Asia-Pacific regions.

The LPNs will be issued under the existing $40 billion multicurrency medium-term note program (provisional Ba1, on review for downgrade) for issuing loan participation notes. The notes will be issued for the sole purpose of financing a loan to Gazprom under the terms of a supplemental loan agreement between Gaz Capital and Gazprom supplemental to a facility agreement between the same parties dated Dec. 7, 2005.

Gazprom will use the proceeds for general corporate purposes.

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