Fitch places TNK-BP at Rating Watch Negative on Rosneft's acquisitionNews // October 25, 2012
Fitch Ratings has placed TNK-BP International Ltd's (TNK-BP) long-term foreign currency Issuer Default Rating (IDR) of 'BBB-', and all other ratings, on Rating Watch Negative (RWN).
This rating action follows the announcement of the likely acquisition by OJSC OC Rosneft (BBB/RWN) of a 100 per cent interest in TNK-BP.
The RWN indicates that, while Fitch does not currently anticipate a downgrade to TNK-BP's rating, there remain many uncertainties about the structure, funding and execution of the transaction, the financial profile of an enlarged group and TNK-BP's bondholders' rights therein.
The agency considers that in the short run the downside risk outweighs upside potential, although Fitch recognises the transaction could improve TNK-BP's credit profile in the long run.
The agency expects to resolve the RWN as the details of the transaction become clearer - probably in the next six months.
TNK-BP International Ltd. is a BVI-registered parent of a number of exploration and production, refining and marketing companies with assets and operations primarily in Russia and Ukraine.
TNK-BP is one of the largest vertically integrated companies in Russia and has the third-largest hydrocarbons reserves and production volume in the country.
Existing ownership and control is divided between BP plc ('A'/Positive), with a 50 per cent stake, on one side and Alfa Group (25 per cent), Access Industries (12.5 per cent) and Renova (12.5 per cent), collectively referred to as AAR, on the other.
Both shareholders recently announced their agreements to sell their entire interests in TNK-BP to Rosneft.