SHANGHAI
\nChinese rating agency CSCI Pengyuan assigned its highest AAA rating to U.S.-blacklisted Russian oil and gas giant Gazprom (GAZP.MM) on Friday, paving the way for any debt issuance in China\u2019s domestic bond market.
\nWestern rating agencies, including Moody\u2019s, Fitch and S&P Global Ratings, have withdrawn credit ratings for Gazprom and many other Russian companies due to the Russia-Ukraine conflict.
\nAccessing China\u2019s bond market, the world\u2019s second-biggest, would be a boon for Russian companies cut off from Western financing due to sanctions.
\n\u201cThe high rating from an independent foreign rating agency confirms Gazprom\u2019s financial stability and indicates the company\u2019s strong creditworthiness,\u201d Gazprom Deputy CEO Famil Sadygov said in a statement.
\nThe long-term issuer rating on Gazprom will not necessarily lead to an imminent issuance of yuan-denominated bonds by the Russian company, said a source with direct knowledge of the situation.
\nBut the rating paves the way for potential yuan bond issuance in the future, though that requires approval from Chinese regulators who will consider geopolitical risks, said the source, who was not authorised to speak publicly.
\nThe \u201cAAA\u201d rating for Gazprom with a stable outlook came just days after Russia and China gave their blessings to the Power of Siberia 2 pipeline, a massive gas project linking the two countries as they seek to reduce economic reliance on the West.
\nGazprom announced the project during Russian President Vladimir Putin\u2019s visit to China last week.
\n\u201cGazprom\u2019s rating reflects its strategic importance and legal ties to the Russian government,\u201d CSCI Pengyuan said.
\nThe firm\u2019s credit profile \u201cis underpinned by its strong business profile as one of the market leaders in the global oil and gas industry and its important position in Russia\u2019s energy market,\u201d it added.
\nLate last month, senior Chinese financial regulators told top Russian energy executives that they would support their companies\u2019 plans to sell yuan \u201cpanda bonds\u201d, the Financial Times reported on Sunday, citing sources.
\nCompanies typically obtain credit ratings before selling bonds in China.
\nSuch issuer ratings can also be used in transactions with Chinese banks and in deals with Chinese counterparties, said the source with knowledge of the situation.
\nGeopolitical risks
\nIn an analysis of Gazprom\u2019s outlook alongside its rating decision, CSCI Pengyuan cited \u201chigh geopolitical risks\u201d associated with the energy company, which was sanctioned by the U.S. following Russia\u2019s invasion of Ukraine in 2022.
\n\u201cSanctions and geopolitical disruptions have adversely affected the company\u2019s operations, leading to a decline in gas export revenue and volume in 2023,\u201d the rating agency said.
\n\u201cAs the geopolitical landscape continues to evolve, operational uncertainties persist.\u201d
\nLast month, CSCI Pengyuan also assigned a \u201cAAA\u201d credit rating to Zarubezhneft, a mid-scale upstream oil company fully owned by the Russian Federation.
\nA decade ago, China and Russia were in talks on a framework to allow Russia to issue yuan-denominated bonds, but little progress has been made.<\/p>\n","protected":false},"excerpt":{"rendered":"
SHANGHAI Chinese rating agency CSCI Pengyuan assigned its highest AAA rating to U.S.-blacklisted Russian oil and gas giant Gazprom (GAZP.MM) on Friday, paving the way for any debt issuance in China\u2019s domestic bond market. Western rating agencies, including Moody\u2019s, Fitch and S&P Global Ratings, have withdrawn credit ratings for Gazprom and many other Russian companies […]<\/p>\n","protected":false},"author":2,"featured_media":501723,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[],"class_list":{"0":"post-501684","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-world"},"yoast_head":"\n