The conflict “Gazprom” and Ukraine could hit the sovereign rating of Russia

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The refusal of Gazprom from the Ukrainian gas transit with high probability will lead to reduced export revenues and, as a consequence, the fall in budget revenues. In addition to taxes and export duties, we are talking about dividends on the state share in the share capital of the gas holding.
The probability of downgrade to speculative grade by international rating agencies S&P and Fitch, from our point of view, is not very high. However, Moody’s could postpone the raising of Russia’s sovereign rating to investment grade. While credit ratings of “Gazprom”, of course, more vulnerable than the sovereign ratings of Russia.
In conclusion, we should say that “Gazprom” can lobby for higher tariffs in the domestic market in order to compensate for financial losses in Europe. The increase in tariffs for gas, of course, will impact negatively on the economic growth in the Russian Federation, and also is unlikely to please ordinary Russians.
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Alexander Razuvayev,
The Director of analytical Department,
Alpari