Moody’s confirmed Bashneft’s rating at Ba2, positive outlook

UFA, 21 November 2014. /Bashinform News Agency, Elvira Latypova/. Moody’s Investors Service confirmed Bashneft’s corporate family rating (CFR) and probability of default rating (PDR) at Ba2. The outlook on all the ratings is positive. As the oil company informs, the ratings were reviewed for downgrade initiated by Moody’s .

According to Moody’s experts, the decision to transfer the shares to state custodianship should be credit positive for Bashneft, in the short term at least, and removes the threat of fines, claims or penalties against the company itself. Bashneft’s good access to foreign currency (approximately 60% of revenue is from export), and cash balances equivalent to approximately $800 million as of end-September 2014 are considered as positive factors. Moody’s also expects that as a government-controlled company, Bashneft may have more significant support from the state.

JSOC Bashneft is a vertically integrated oil company that operates in more than 20 regions of Russia and abroad. By the results of 2013 it ranks the sixth in Russia in terms of oil extraction (16.1 million tons) and the fourth in terms of its primary refining (21.4 million tons). The main shareholder is JSFC Sistema.

On October 30, the Moscow Arbitration Court on the suit filed by the Prosecutor General's Office against JSFC Sistema and its subsidiary CJSC Sistema-Invest reclaimed 71.6 percent of shares in favour of the Russian Federation. The judgment could be appealed within one month but on November 12 Sistema stated that it would not appeal, and reported on the preparation of a claim for damages from the contractor - LLC "Ural-Invest".