S&P upgrades Novatek

S&P said that it raised the corporate credit rating on OAO Novatek to BBB- from BB+.

The agency also said it raised the ratings on Novatek's loan participation notes to BBB- from BB+, along with the company’s Russia national scale rating to ruAAA from ruAA+.

All these ratings were removed from CreditWatch with positive implications, where they were placed in September.

The outlook is stable.

The upgrades reflect a view that Novatek's low debt leverage and solid operating performance could allow it to sustain a hypothetical sovereign default and be rated one notch higher than the foreign-currency sovereign rating and the transfer and convertibility assessment on Russia, S&P said.

This is because Novatek's leverage has declined and its adjusted debt-to-EBITDA has reduced to 1.5x from 2x with a further decline expected, the agency said.

The company also recently completed the disposal of a 9.9% stake in the Yamal liquid natural gas project for €1.1 billion, further supporting the improvement in credit metrics, S&P said.

As Novatek continues to repay debt, its debt-maturity profile similarly improves, the agency.

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