Fitch upgrades Novatek to BBB

Fitch Ratings said it upgraded PAO Novatek's long-term foreign-currency issuer default rating and senior unsecured rating to BBB from BBB-.

The outlook is stable.

“The upgrade reflects Novatek's improved business profile following the start-up of the transformational Yamal LNG project, its strong free cash-flow generation capacity, and its currently low leverage,” Fitch said in a news release.

“Novatek is considering another LNG project, Arctic LNG 2, and its leverage could come under some pressure in the medium term depending on the funding structure for this potential project, but we believe that the company should be able to maintain its leverage within our guidance for the current rating, namely, funds from operations (FFO) adjusted net leverage below 2.5x.”

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