S&P cuts Yukos to BB-

Standard & Poor's said it has lowered its long-term corporate credit rating on Russian oil company OAO NK Yukos to BB- from BB. The rating remains on Credit Watch with negative implications, where it was placed on Oct. 31 when the 44% stake in the company indirectly owned by the former CEO Mikhail Khodorkovsky and several other people was frozen.

At the same time, the Russian national scale rating on Yukos was lowered to ruAA- from ruAA+.

"The downgrade reflects continuing political pressure on Yukos and the consequent tax, liquidity, regulatory, governance, and management risks," said S&P credit analyst Elena Anankina.

This pressure also appears to have triggered conflict between Yukos' two large shareholder groups and the reported likely reversal of the merger with OAO Siberian Oil Co. (Sibneft; B+/watch developing).

The downgrade acknowledges, in addition, Yukos' failure to benefit from its investment in a 92% share in Sibneft. The deal weakened Yukos' financial profile by increasing leverage, while there is some uncertainty about the amount and timing of investment recovery. Moreover, Yukos' ability to control Sibneft in the meantime is highly questionable.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.