S&P lifts Novatek from junk

Standard & Poor's said it raised the long-term corporate credit rating on OAO Novatek to BBB- from BB+ and affirmed the Russian national scale rating at ruAA+.

The outlook is stable.

The agency also assigned a BBB- issue rating and an ruAA+ Russian national scale rating to a proposed RUB 10 billion bond.

S&P said the upgrade reflects the company's very healthy credit metrics despite large growth-oriented capital spending and acquisitions in 2008 and 2009 and its high profitability, supported by the still-improving fundamentals of Russia's gas industry, a profitable condensate business and efficient low-cost operations.

The upgrade also reflects a positive record of co-operation with state-controlled Russian gas distribution monopoly OAO Gazprom (BBB/negative/A-3).

Free operating cash flow was high and credit ratios remained very strong with a debt-to-EBITDA ratio below 1x, the agency noted.

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