S&P Places ALROSA Long-Term Credit Rating On CreditWatch
Feb 16, 2014 6:35 AM
By Deena Taylor
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RAPAPORT... Standard & Poor's placed its ''BB-'' long-term corporate credit rating of ALROSA on CreditWatch due to renewed concerns that the Russian diamond miner's disposal of oil and gas assets may be delayed.
The company intended to use proceeds from its deal with Rosneft to repay $1.2 billion in bank loans due in March 2014. The CreditWatch placement reflects the rating agency's concerns about ALROSA's ability to refinance $1.2 billion in short-term loans from Alfa-Bank, UniCredit Bank and VTB Bank on time. ALROSA entered into a sales agreement with Rosneft in September 2013.
The ratings agency noted that ALROSA did not have any committed bank lines, except for a three-month extension option for one of the maturing bank lines, along with limited cash balances.
S&P said ALROSA's short-term refinancing risk appears low as the company can gain access to financing from banks such as Russian government-owned VTB. The Russian government owns a majority stake in the company.
ALROSA's stand-alone credit profile was assessed at ''b+.'' S&P lifted the rating by one notch because of ALROSA's status as a government-related entity with a "moderate" likelihood of receiving extraordinary government support if needed.
The ratings firm added that the company's CreditWatch will be resolved by mid-March, following a review of ALROSA's refinancing plan for its long-term debt and its $500 million Eurobond, which matures in the fourth quarter of 2014.
The ratings firm added that it will reevaluate the company's liquidity management policies and lower the rating by one notch if ALROSA is not able to receive payment from Rosneft or secure long-term funding to refinance its debt before mid-March.
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Tags:
Alrosa, Deena Taylor, standard & poor's
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