Standard & Poor’s puts Uralsvyazinform on CreditWatch

3 March 2009 (08:53)

Standard & Poor’s, the rating agency, placed Russian landline operator Uralsvyazinform’s long-term credit rating (namely, BB-) on the CreditWatch list, with Negative Rating Outlook.

‘This has reflected our concerns over the way the company’s liquid assets are managed; we actually feel that it’s a bit too harsh,’ says Standard & Poor’s analyst Alexander Gryaznov.

‘We believe the operator is going to retire its three-billion-ruble bond issue on time at the end of March using the remainder of the available money and short-term credit lines. However, we did expect the company to refinance its liabilities through turning to ones with longer retirement periods. Then, Uralsvyazinform’s rating is being badly affected by the low liquidity figures against the great need for refinancing its short-term debts as well as for more control over the increasing costs and the possible regulatory risks,’ the agency representatives were reported as saying.

‘In whichever case, the company’s poor liquidity status is the main factor restraining Uralsvyazinform’s rating growth at the moment. The operator is ever-susceptible to refinancing risks, mainly since its credit lines are only valid for no longer than six months. Even though this is a common case among most Russian companies, Standard & Poor’s still considers such a way of liquid asset management to be very aggressive and therefore risk-filled under the current circumstances. Given the global and domestic loan markets’ meltdown, Uralsvyazinform is highly unlikely to improve on its liquidity indicators this year,’ the agency claims.

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