Moody's downgrades Rosneft

Moody's Investors Service said it downgraded to Baa2 the ratings of OJSC Rosneft and Rosneft International Holdings Ltd. as well as the ratings of their debt-issuing subsidiaries to Baa2 from Baa1. The outlook is negative.

These actions follow Moody's downgrade of Russia's government bond rating to Baa2 from Baa1 on Oct. 17.

The downgrade of Rosneft's ratings reflects Moody's view that the company shows a weaker standalone financial profile than other large Russian peer companies. As a result, it may require financial support from the sovereign, warranting a closer link between the company's and the sovereign's ratings. The agency also noted that Rosneft was included in the U.S. and E.U. sectoral sanctions lists.

However, Moody's said Rosneft's credit profile is underpinned by its strong business profile as the world's largest public oil and gas company in terms of reserves and production, its preferential access to oil and gas resources and the evolving opportunities from trading, financial and exploration and production cooperation with China's oil and gas companies.

The negative outlook reflects Moody's view that both companies' ratings are sensitive to and could be affected by changes in sovereign creditworthiness.

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