Chinese rating agency gives Gazprom AAA

A photo of the Gazprom building taken from below in Moscow, Russia, June 30, 2006.[Photo/IC]

Dagong Global Credit Rating Co Ltd gave an AAA rating for Russian gas giant OAO Gazprom, despite falling oil price, volatility in rouble value and simmering tension between the Europe and Russia.

Dagong, a major Chinese rating agency, announced the rating, with a stable outlook for the company on Monday. The result means a rating even much higher than Russia's sovereignty rating, a rare practice among major international credit rating firms.

The rating followed the company's decision on Jan 8 to maintain Russia's sovereign rating at A with a stable outlook.

That was a stark contrast with major international raters' view. Standard & Poor's, for example, on Jan 26 downgraded Russia's sovereign debt a notch to BB+, which means debt sold by the country was categorized as 'junk' status. Earlier, another two major raters, Moody's Investors Service and Fitch Rating, downgraded Russia's rating to just a notch above "junk" status.

All three agencies gave a "negative" outlook for Russia's debt.

Dagong in its press release explained that it gave an AAA rating to the world's biggest natural gas company mainly because two strategic agreements Gazprom signed with China in last Nov and May to provide natural gas through a western and eastern line.

Dagong will hold a news conference this morning to further explain its stance.

Gazprom said on Jan 29 that its third quarter net profit fell 61 percent to 105.7 billion roubles ($1.52 billion). The firm stopped supplying Ukraine with gas in June in a dispute over pricing and debt, which hurt its revenues.

Dagong's rating provides a rare backing to Gazprom as it seek to sell renminbi-denominated bonds recently in Hong Kong, after mounting financing difficulties in the western financial markets, analysts said.