Leading international rating company Standard and Poor’s has assigned Russian Grids JSC a long-term credit rating of BBB- on the international scale and a rating of ruAAA on the national scale.
The BBB- credit rating is an investment category rating, which confirms the credit quality and reliability of the borrower’s obligations. Investment grade ratings reflect fairly low to moderate credit risks and meet the investment policy statement requirements set forth by conservative investors such as leading international sovereign wealth funds, pension funds as well as life insurance companies and their management companies, which includes the State management company Vnesheconombank and the Russian National Wealth Fund. As such, receiving an investment grade credit rating significantly expands the capabilities of Russian Grids JSC with respect to accessing international and national capital markets.
During their rating process, Standard and Poor’s accounted for Russian Grids’ leading role in electric energy, including its monopoly in providing electricity along the primary networks and its dominant role in the distribution networks.
“Receiving this international investment grade credit rating is an important evaluation of what we do at Russian Grids. This is evidence of the trust that the company enjoys in the international financial community and a testimony to the stable position of Russian Grids JSC in this sector as well as in the national economy, which has been attested by the company and her leadership in our first year of working in this new capacity,” Russian Grids Deputy General Director of Finance Yegor Prokhorov commented on Standard and Poor’s decision.
The rating is an objective and independent reflection of the financial stability and reliability of Russian Grids JSC and its subsidiaries and affiliates.
S&P’s report outlines the main factors which led to the credit rating for Russian Grids JSC. These factors include the company’s monopoly and dominating role on the electricity supply and distribution markets, respectively, the predominant role of Russian Grids’ reliable and regulated business activities in the sphere of supplying and distributing electricity, the advantages of regional diversification (Russian Grids operates in practically all regions across Russia), the relatively favourable long-term tariff regulation system as well as the acceptable level of liquidity, the company’s strategic importance for the government and a fairly high probability of substantial and timely extraordinary government support. S&P also highly rated the company’s structure and schedule of debt repayment, which is fully nominated in roubles.
As for factors that may positively influence Russian Grids’ rating in the future, S&P noted the company should focus on strengthening its own creditworthiness and to constantly maintain its level of debt burden at a moderate level on the mid-term horizon until 2016, while also ensuring ample transparency in the government strategy to expand the electricity sector and to further continue the company’s present successful operations.
The full Standard and Poor’s credit rating report is available on the company’s official website at: www.standardandpoors.com.