Shanghai:
The Chinese rating agency CSCI Pengyuan awarded its highest AAA note to the Russian giant and Russian gas from US Gazprom (Gazp.mm) on Friday, paved the way for any debt emission on the Chinese interior bond market.
Western rating agencies, notably Moody’s, Fitch and S&P Global Nations, have withdrawn credit ratings for Gazprom and many other Russian companies due to the Russian-Ukraine conflict.
Access to the Chinese bond market, the second largest largest in the world, would be a boon for Russian companies cut off from Western funding due to sanctions.
“The high note of an independent foreign rating agency confirms the financial stability of Gazprom and indicates the highlighting of the company,” said Deputy CEO of Gazprom, Famil Sadygov, in a press release.
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The long -term transmitter on Gazprom will not necessarily lead to an imminent issue of obligations denominated in Yuan by the Russian company, said a source with direct knowledge of the situation.
But the rating is paving the way to the potential emission of obligations in Yuan in the future, although this requires the approval of Chinese regulators who will examine geopolitical risks, said that the source, which was not authorized to speak publicly.
The “AAA” note for Gazprom with a stable perspective intervened only a few days after Russia and China gave their blessings to the Power of Siberia 2 Pipeline, a massive gas project connecting the two countries as they seek to reduce economic dependence to the west.
Gazprom announced the project during the visit of the Russian president Vladimir Putin in China last week.
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“The rating of Gazprom reflects its strategic importance and its legal links with the Russian government,” said CSCI Pengyuan.
The company’s credit profile “is supported by its solid corporate profile as one of the leaders in the global oil and gas industry market and its important position in the Russian energy market,” he added.
At the end of last month, senior Chinese financial regulators told senior Russian energy leaders that they would support their companies’ plans to sell Yuan’s “panda bonds”, the Financial Times reported on Sunday, citing sources.
Companies generally obtain credit ratings before selling bonds in China.
These issuer notes can also be used in transactions with Chinese banks and in chinese counterparts, said the source knowing the situation.
Geopolitical risks
In an analysis of Gazprom’s prospects in parallel with its rating decision, CSCI Pengyuan cited “high geopolitical risks” associated with the energy company, which was sanctioned by the United States after the invasion of Ukraine by Russia in 2022.
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“The sanctions and geopolitical disturbances affected the operations of the company, resulting in a drop in income and the volume of gas export in 2023,” said the rating agency.
“While the geopolitical landscape continues to evolve, operational uncertainties persist.”
Last month, CSCI Pengyuan also awarded a “AAA” credit note to Zarubezhneft, an oil company upstream in mid-scale at full ownership of the Russian Federation.
Ten years ago, China and Russia were in talks on a framework to allow Russia to issue obligations made in Yuan, but little progress has been made.
