Fitch revises Naftogaz’s outlook to stable on sovereign action, affirms at ‘B’

Fitch Ratings has revised National Joint Stock Company Naftogaz Ukrainy's outlook to stable from positive, while affirming company's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'B', the rating agency said on its website.

"The outlook revision follows a recent similar action on Ukraine's sovereign rating (B/Stable) and the application of Fitch's Government-Related Entities (GRE) Rating Criteria. Fitch equalizes Naftogaz's ratings with those of the sovereign, reflecting the company's strong links with the sovereign and our assessment of the company's Standalone Credit Profile (SCP) at 'b-'," it said.

"The 'b-' SCP of Naftogaz reflects volatility in its operations, following a significant increase of gas prices, its ability to cover domestic consumption needs and to collect receivables in a weaker domestic economy, and foreign-exchange (FX) exposure," according to the report.

"We expect the nearest bond repayment to be covered by available sources, given no dividend payments and significantly lower capex. However, further capex pressure may arise as Naftogaz invests in its resource base to arrest a decline in natural gas production. We expect leverage to remain high compared with peers' but stable as incurrence-based covenants limit indebtedness," the agency said.

Source: www.en.interfax.com.ua