Fitch affirms Naftogaz at the level of In-

Fitch подтвердил рейтинг "Нафтогаза" на уровне В-

The Agency did not consider the receipt of $2.6 billion from Gazprom in accordance with the decision of the Stockholm court.

International rating Agency Fitch Ratings affirmed long-term Issuer default rating (IDR) of “Naftogaz of Ukraine” at the level “B-” with a stable Outlook.

“The confirmation reflects the strong ties of “Naftogaz” with the sole shareholder of Ukraine’s (‘B-‘ /stable)…”, – said the Agency on Friday evening.

Fitch added that the rating also takes into account the weak liquidity profile of “Naftogaz”, but in General, relatively low leverage, as well as some uncertainty associated with the internal prices for gas, unbundling and political risk.

The Agency points out that the state still guarantees a significant portion of the debt of “Naftogaz” – 30% of the gross debt of the company at the end of 2018, and the company’s financial performance are closely monitored by the IMF, its main creditor of Ukraine, which stimulates the government to ensure adequate funding of the NAC.

According to the Agency, stronger financial results, “Naftogaz” in 2016-2018 may be unsustainable in the long term, as they depend on external factors. Fitch also exclude from their forecasts the payment by the government for the difference in prices at which the company sells gas to the population and industry.

As for unbundling expected in 2020, Fitch does not assume a NAK for any income from transit or any compensation for the divided assets. Another reason for the exclusion of transit revenues from the valuation of the company in the future, which is indicated by the Agency, the expiration of the contract with “Gazprom”. According to Fitch, after 2020, “Naftogaz” will focus on the domestic market: sale and storage of gas, sale of oil products and LNG and gas production.

The Agency also conservatively does not take into account in their assessments of the acquisition of Ukrainian company $2.6 billion from Gazprom in accordance with the decision of the Stockholm arbitration, as the terms are not defined.