Russia Energy Giant’s Debt Ratings Cut as Sanctions Grow

The credit ratings for some of Russia’s largest energy and transportation companies were cut by Standard & Poor’s as sanctions against the Russian government over the Ukraine conflict threaten an already-weakened economy.

Ratings for natural gas producer OAO Gazprom, oil explorer OAO Rosneft (ROSN), pipeline operator OAO Transneft, power transmitter Federal Grid Co. and OAO Russian Railways and its JSC Federal Passenger subsidiary were lowered today, three days after the New York-based credit-rating service downgraded Russian Federation sovereign debt to its lowest investment grade.

“The negative outlooks on all these entities mirror the negative outlook on Russia,” S&P said in a statement today. “The credit ratings on these entities are directly influenced by the ratings on the sovereign, given their role and links with the state.”

The ratings for foreign currency-denominated debt were cut to BBB- from BBB for all six entities, S&P said. The Rosneft downgrade affected $10 billion in senior unsecured notes and $3 billion in loan participation notes.

Gazprom is Russia’s largest company by market value, followed by Rosneft, according to data compiled by Bloomberg.

Gazprom, Rosneft and Transneft are majority owned by the Russian government. Rosneft is led by Igor Sechin, an ally of President Vladimir Putin who was personally targeted by expanded U.S. trade sanctions today.

To contact the reporter on this story: Joe Carroll in Chicago at jcarroll8@bloomberg.net

To contact the editors responsible for this story: Susan Warren at susanwarren@bloomberg.net Jasmina Kelemen, Carlos Caminada

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.