S&P lowers MegaFon

Standard & Poor’s said it downgraded the foreign-currency rating on MegaFon OJSC to BB+ from BBB- and affirmed the company’s BBB- local-currency rating and ruAAA Russia national scale rating.

The outlook is negative.

The downgrade of MegaFon’s foreign-currency rating follows the recent downgrade of Russia’s sovereign ratings, S&P said.

As a non-exporter, MegaFon cannot be rated higher than the sovereign, the agency said.

The ratings also reflect a belief that MegaFon will be able to service its local-currency liabilities in case of a sovereign default, S&P said.

MegaFon's foreign-currency-denominated debt, whose share is low, is related to facilities backed by export credit agencies and long-term funding for equipment purchases.

The repayment of this debt is unlikely to be accelerated in such a scenario, the agency said.

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