S&P rates Moscow Integrated BB+/B

Standard & Poor's said it assigned a BB+ long-term and B short-term corporate credit ratings to Moscow Integrated Power Co., JSC, which is 83.77% owned by the city of Moscow (BBB+/stable). The agency assigned an ruAA+ Russia national scale rating.

The outlook is stable.

Ratings reflect aggressive expansion strategy and sizable investment program, volatile and continually declining heat demand in its service area and the company's lack of transparency and an explicit financial policy because of the ongoing consolidation of heat distribution assets, the agency said.

Constraints also include weak standalone liquidity, a politicized tariff regime and the transitional nature of the Russian economy, the agency noted.

These weaknesses are mitigated by dominant position as the city's district heating utility, its diversified customer base, relatively high wealth and economic diversification in its service area, support from the city's government, a relatively modern asset base and moderate debt leverage, S&P said.

At the end of 2007, the company's adjusted debt-to-EBITDA ratio fell to 2.1x after consolidation.

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