The standalone creditworthiness of Rosneft (hereinafter, the Company, the Group, or Rosneft) is determined taking into account the very stable market position, very strong business profile, geographic diversification, and corporate governance assessments, low industry risk, very large size of business, high profitability, low leverage, strong liquidity, and medium assessments of coverage and cash flow. The credit rating is also is based on the very high assessment of state support for the Company.
Rosneft is the leader of the Russian oil industry and one of the world’s largest oil and gas companies. Rosneft’s share in Russian production of liquid hydrocarbons is around 40% and its share in natural gas production stands at over 10%. In addition, Rosneft is Russia’s largest oil refining company and operates 13 large oil refineries.
key assessment factors
The very strong business profile is based on the very low cost of production and replenishment of the raw material base, very high level of hydrocarbon reserves, high volume and depth of production, as well as very high diversification of production assets, sales channels and markets. The Company controls oil refining assets in the country’s most promising regions, has a large (in the context of Russia) network of filling stations, and is actively present in international markets.
The very high assessment of corporate governance takes into account the very high assessments of the management strategy, risk management system, governance structure, and financial transparency. The Company’s strategy results in steady growth of both physical production indicators and financial results. The level of financial transparency is in line with the best international practices in terms of disclosure of both financial and operational indicators. The Group’s structure stems from the scale of its activities.
High business profitability is driven by a set of factors, mainly: high operational efficiency, very low production costs, and effective monetization channels. Rosneft is the leader in terms of production costs among the world’s largest public companies — the Company’s specific operating costs are about USD 3 per barrel of oil equivalent.
Low leverage and medium coverage. The Agency included advance payments under long-term contracts for the supply of oil and oil products as part of the Company’s leverage. At the same time, the Company’s FFO was adjusted for the effect of offsets against advance payments and for interest for the use of funds under long-term contracts for the supply of oil and petroleum products. ACRA assessed the weighted average ratio of total debt to FFO before net interest payments for 2020 to 2025 at 2.2x. According to ACRA’s assessments, the weighted average ratio of FFO before net interest payments to interest payments for the same period will be 6.8x.
Strong liquidity and medium assessment of cash flow. Given the significant size of undrawn limits under credit lines, as well as the Company’s extensive opportunities to raise funding, ACRA assesses its liquidity as strong. At the same time, cash flow is assessed as medium due to substantial upcoming capital expenditures and dividend payments.
The very high assessment of state support stems from the very high assessments of the following sub-factors: Barriers and Limitations; Exclusivity of Performed Functions; Ownership, Control, and Regulation; Role in the Economy and Reputational Risks; and Social Role. Rosneft is Russia’s largest taxpayer, a major employer, and is critically important to the country’s energy security.
key assumptions
-
Average annual Urals oil price at USD 68–75/bbl from 2023 to 2025;
-
Average annual USD/RUB exchange rate at 72–76 rubles from 2023 to 2025;
-
The Company increasing its production of hydrocarbons to 330 mln tons of oil equivalent in line with the target set by the Rosneft 2030 strategy, as well as growth of the share of gas in total production to 25% by 2025;
-
Dividend payments at 50% of net profits from 2023 to 2025.
potential outlook or rating change factors
The Stable outlook assumes that the rating will highly likely stay unchanged within the 12 to 18-month horizon.
A negative rating action may be prompted by:
-
Significant decline of the Company’s systemic importance to the Russian economy;
-
Loss of control by the state or considerable changes to industry legislation.
rating components
SCA: aa+.
Support: on par with the RF.
ISSUE RATINGS
Rationale. The issues listed below represent senior unsecured debt of Rosneft. Due to the absence of either structural or contractual subordination of the issues, ACRA regards them as equal to other existing and future unsecured and unsubordinated debt obligations of Rosneft. According to ACRA’s methodology, the credit ratings of the issues are equivalent to that of Rosneft — AAA(RU).
key issue properties
The borrower/actual issuer for all the issues is Rosneft (credit rating AAA(RU), outlook stable).
1) ISIN RU000A0JX132
|
Type of security |
Exchange-traded non-convertible certificated interest-bearing bonds subject to centralized title registration, series 001P-01 |
|
Issue volume |
RUB 600 bln |
|
Placement start date/maturity date |
December 7, 2016/November 25, 2026 |
2) ISIN RU000A0JX355
|
Type of security |
Exchange-traded non-convertible certificated interest-bearing bonds subject to centralized title registration, series 001P-02 |
|
Issue volume |
RUB 30 bln |
|
Placement start date/maturity date |
December 23, 2016/December 11, 2026 |
3) ISIN RU000A0JX413
|
Type of security |
Exchange-traded non-convertible certificated interest-bearing bonds subject to centralized title registration, series 001P-03 |
|
Issue volume |
RUB 20 bln |
|
Placement start date/maturity date |
December 29, 2016/December 17, 2026 |
4) ISIN RU000A0JXQK2
|
Type of security |
Exchange-traded non-convertible certificated interest-bearing bonds subject to centralized title registration, series 001P-04 |
|
Issue volume |
RUB 40 bln |
|
Placement start date/maturity date |
May 4, 2017/April 22, 2027 |
5) ISIN RU000A0JXR68
|
Type of security |
Exchange-traded non-convertible certificated interest-bearing bonds subject to centralized title registration, series 001P-05 |
|
Issue volume |
RUB 15 bln |
|
Placement start date/maturity date |
May 18, 2017/May 8, 2025 |
6) ISIN RU000A0JXXD3
|
Type of security |
Exchange-traded non-convertible certificated interest-bearing bonds subject to centralized title registration, series 001P-06 |
|
Issue volume |
RUB 90 bln |
|
Placement start date/maturity date |
July 26, 2017/July 14, 2027 |
|
Type of security |
Exchange-traded non-convertible certificated interest-bearing bonds subject to centralized title registration, series 001P-07 |
|
Issue volume |
RUB 176 bln |
|
Placement start date/maturity date |
July 26, 2017/July 14, 2027 |
|
Type of security |
Exchange-traded non-convertible certificated interest-bearing bonds subject to centralized title registration, series 001P-08 |
|
Issue volume |
RUB 100 bln |
|
Placement start date/maturity date |
October 12, 2017/September 30, 2027 |
9) ISIN RU000A0ZYJH7
|
Type of security |
Exchange-traded non-convertible certificated interest-bearing bonds subject to centralized title registration, series 002P-01 |
|
Issue volume |
RUB 300 bln |
|
Placement start date/maturity date |
December 6, 2017/November 24, 2027 |
10) ISIN RU000A0ZYJJ3
|
Type of security |
Exchange-traded non-convertible certificated interest-bearing bonds subject to centralized title registration, series 002P-02 |
|
Issue volume |
RUB 300 bln |
|
Placement start date/maturity date |
December 6, 2017/November 24, 2027 |
11) ISIN RU000A0ZYLG5
|
Type of security |
Exchange-traded non-convertible certificated interest-bearing bonds subject to centralized title registration, series 002P-03 |
|
Issue volume |
RUB 30 bln |
|
Placement start date/maturity date |
December 27, 2017/December 9, 2027 |
12) ISIN RU000A0ZYT40
|
Type of security |
Exchange-traded non-convertible certificated interest-bearing bonds subject to centralized title registration, series 002P-04 |
|
Issue volume |
RUB 50 bln |
|
Placement start date/maturity date |
February 15, 2018/February 3, 2028 |
13) ISIN RU000A0ZYVU5
|
Type of security |
Exchange-traded non-convertible certificated interest-bearing bonds subject to centralized title registration, series 002P-05 |
|
Issue volume |
RUB 20 bln |
|
Placement start date/maturity date |
March 2, 2018/February 18, 2028 |
14) ISIN RU000A1008P1
|
Type of security |
Exchange-traded non-convertible certificated interest-bearing bonds subject to centralized title registration, series 002P-06 |
|
Issue volume |
RUB 10 bln |
|
Placement start date/maturity date |
April 5, 2019/March 23, 2029 |
15) ISIN RU000A1008Q9
|
Type of security |
Exchange-traded non-convertible certificated interest-bearing bonds subject to centralized title registration, series 002P-07 |
|
Issue volume |
RUB 20 bln |
|
Placement start date/maturity date |
April 5, 2019/March 23, 2029 |
16) ISIN RU000A100KY3
|
Type of security |
Exchange-traded non-convertible certificated interest-bearing bonds subject to centralized title registration, series 002P-08 |
|
Issue volume |
RUB 25 bln |
|
Placement start date/maturity date |
July 15, 2019/July 2, 2029 |
17) ISIN RU000A100YQ0
|
Type of security |
Exchange-traded non-convertible certificated interest-bearing bonds subject to centralized title registration, series 002P-09 |
|
Issue volume |
RUB 25 bln |
|
Placement start date/maturity date |
October 24, 2019/October 11, 2029 |
18) ISIN RU000A101SF3
|
Type of security |
Exchange-traded non-convertible uncertificated interest-bearing bonds subject to centralized title registration, series 002P-10 |
|
Issue volume |
RUB 15 bln |
|
Placement start date/maturity date |
June 10, 2020/May 29, 2030 |
19) ISIN RU000A103FC3
|
Type of security |
Exchange-traded non-convertible uncertificated interest-bearing bonds subject to centralized title registration, series 002P-11 |
|
Issue volume |
USD 2.5 bln |
|
Placement start date/maturity date |
July 23, 2021/July 11, 2031 |
20) ISIN RU000A1057S2
|
Type of security |
Exchange-traded non-convertible uncertificated interest-bearing bonds subject to centralized title registration, series 002P-12 |
|
Issue volume |
CNY 15 bln |
|
Placement start date/maturity date |
September 20, 2022/September 7, 2032 |
21) ISIN RU000A102EF1
|
Type of security |
Exchange-traded non-convertible uncertificated interest-bearing bonds subject to centralized title registration, series 003P-01 |
|
Issue volume |
RUB 400 bln |
|
Placement start date/maturity date |
November 26, 2020/November 14, 2030 |
22) ISIN RU000A102EE4
|
Type of security |
Exchange-traded non-convertible uncertificated interest-bearing bonds subject to centralized title registration, series 003P-02 |
|
Issue volume |
RUB 400 bln |
|
Placement start date/maturity date |
November 26, 2020/November 14, 2030 |
23) ISIN RU000A0JTYL2
|
Type of security |
Non-convertible certificated interest-bearing bonds subject to centralized title registration, series 06 |
|
Issue volume |
RUB 10 bln |
|
Placement start date/maturity date |
June 11, 2013/May 30, 2023 |
24) ISIN RU000A0JTS06
|
Type of security |
Non-convertible certificated interest-bearing bonds subject to centralized title registration, series 07 |
|
Issue volume |
RUB 15 bln |
|
Placement start date/maturity date |
March 22, 2013/March 10, 2023 |
25) ISIN RU000A0JTS22
|
Type of security |
Non-convertible certificated interest-bearing bonds subject to centralized title registration, series 08 |
|
Issue volume |
RUB 15 bln |
|
Placement start date/maturity date |
March 22, 2013/March 10, 2023 |
26) ISIN RU000A0JTYM0
|
Type of security |
Non-convertible certificated interest-bearing bonds subject to centralized title registration, series 09 |
|
Issue volume |
RUB 15 bln |
|
Placement start date/maturity date |
June 11, 2013/May 30, 2023 |
27) ISIN RU000A0JTYN8
|
Type of security |
Non-convertible certificated interest-bearing bonds subject to centralized title registration, series 10 |
|
Issue volume |
RUB 15 bln |
|
Placement start date/maturity date |
June 11, 2013/May 30, 2023 |
28) ISIN RU000A0JUFU0
|
Type of security |
Exchange-traded non-convertible certificated interest-bearing bonds subject to centralized title registration, series BO-01 |
|
Issue volume |
RUB 15 bln |
|
Placement start date/maturity date |
February 18, 2014/February 6, 2024 |
29) ISIN RU000A0JV1W5
|
Type of security |
Exchange-traded non-convertible certificated interest-bearing bonds subject to centralized title registration, series BO-02 |
|
Issue volume |
RUB 15 bln |
|
Placement start date/maturity date |
December 11, 2014/November 28, 2024 |
30) ISIN RU000A0JV1X3
|
Type of security |
Exchange-traded non-convertible certificated interest-bearing bonds subject to centralized title registration, series BO-03 |
|
Issue volume |
RUB 15 bln |
|
Placement start date/maturity date |
December 11, 2014/November 28, 2024 |
31) ISIN RU000A0JV1Y1
|
Type of security |
Exchange-traded non-convertible certificated interest-bearing bonds subject to centralized title registration, series BO-04 |
|
Issue volume |
RUB 15 bln |
|
Placement start date/maturity date |
December 11, 2014/November 28, 2024 |
32) ISIN RU000A0JUCS1
|
Type of security |
Exchange-traded non-convertible certificated interest-bearing bonds subject to centralized title registration, series BO-05 |
|
Issue volume |
RUB 20 bln |
|
Placement start date/maturity date |
December 23, 2013/December 11, 2023 |
33) ISIN RU000A0JUCR3
|
Type of security |
Exchange-traded non-convertible certificated interest-bearing bonds subject to centralized title registration, series BO-06 |
|
Issue volume |
RUB 20 bln |
|
Placement start date/maturity date |
December 23, 2013/December 11, 2023 |
34) ISIN RU000A0JUFV8
|
Type of security |
Exchange-traded non-convertible certificated interest-bearing bonds subject to centralized title registration, series BO-07 |
|
Issue volume |
RUB 20 bln |
|
Placement start date/maturity date |
February 18, 2014/February 6, 2024 |
35) ISIN RU000A0JV201
|
Type of security |
Exchange-traded non-convertible certificated interest-bearing bonds subject to centralized title registration, series BO-08 |
|
Issue volume |
RUB 20 bln |
|
Placement start date/maturity date |
December 11, 2014/November 28, 2024 |
36) ISIN RU000A0JV219
|
Type of security |
Exchange-traded non-convertible certificated interest-bearing bonds subject to centralized title registration, series BO-09 |
|
Issue volume |
RUB 20 bln |
|
Placement start date/maturity date |
December 11, 2014/November 28, 2024 |
37) ISIN RU000A0JV235
|
Type of security |
Exchange-traded non-convertible certificated interest-bearing bonds subject to centralized title registration, series BO-10 |
|
Issue volume |
RUB 20 bln |
|
Placement start date/maturity date |
December 11, 2014/November 28, 2024 |
38) ISIN RU000A0JV243
|
Type of security |
Exchange-traded non-convertible certificated interest-bearing bonds subject to centralized title registration, series BO-11 |
|
Issue volume |
RUB 30 bln |
|
Placement start date/maturity date |
December 11, 2014/November 28, 2024 |
39) ISIN RU000A0JV250
|
Type of security |
Exchange-traded non-convertible certificated interest-bearing bonds subject to centralized title registration, series BO-12 |
|
Issue volume |
RUB 30 bln |
|
Placement start date/maturity date |
December 11, 2014/November 28, 2024 |
40) ISIN RU000A0JV268
|
Type of security |
Exchange-traded non-convertible certificated interest-bearing bonds subject to centralized title registration, series BO-13 |
|
Issue volume |
RUB 30 bln |
|
Placement start date/maturity date |
December 11, 2014/November 28, 2024 |
41) ISIN RU000A0JV227
|
Type of security |
Exchange-traded non-convertible certificated interest-bearing bonds subject to centralized title registration, series BO-14 |
|
Issue volume |
RUB 30 bln |
|
Placement start date/maturity date |
December 11, 2014/November 28, 2024 |
Sources: ACRA, issuer’s data
REGULATORY DISCLOSURE
The credit ratings have been assigned to Rosneft and the bond issues of Rosneft (RU000A0JX132, RU000A0JX355, RU000A0JX413, RU000A0JXQK2, RU000A0JXR68, RU000A0JXXD3, RU000A0JXXE1, RU000A0ZYCP5, RU000A0ZYJH7, RU000A0ZYJJ3, RU000A0ZYLG5, RU000A0ZYT40, RU000A0ZYVU5, RU000A1008P1, RU000A1008Q9, RU000A100KY3, RU000A100YQ0, RU000A101SF3, RU000A103FC3, RU000A1057S2, RU000A102EF1, RU000A102EE4, RU000A0JTYL2, RU000A0JTS06, RU000A0JTS22, RU000A0JTYM0, RU000A0JTYN8, RU000A0JUFU0, RU000A0JV1W5, RU000A0JV1X3, RU000A0JV1Y1, RU000A0JUCS1, RU000A0JUCR3, RU000A0JUFV8, RU000A0JV201, RU000A0JV219, RU000A0JV235, RU000A0JV243, RU000A0JV250, RU000A0JV268, RU000A0JV227) under the national scale for the Russian Federation based on the Methodology for Credit Ratings Assignment to Non-Financial Corporations under the National Scale for the Russian Federation, Methodology for Analyzing Rated Entities Associated with a State or a Group, and the Key Concepts Used by the Analytical Credit Rating Agency within the Scope of Its Rating Activities. The Methodology for Assigning Credit Ratings to Financial Instruments under the National Scale for the Russian Federation was also applied to assign credit ratings to the above issues.
Credit ratings have been assigned to Rosneft and the bond issues of Rosneft for the first time. The credit rating of Rosneft and its outlook and the credit ratings of the bond issues of Rosneft (RU000A0JX132, RU000A0JX355, RU000A0JX413, RU000A0JXQK2, RU000A0JXR68, RU000A0JXXD3, RU000A0JXXE1, RU000A0ZYCP5, RU000A0ZYJH7, RU000A0ZYJJ3, RU000A0ZYLG5, RU000A0ZYT40, RU000A0ZYVU5, RU000A1008P1, RU000A1008Q9, RU000A100KY3, RU000A100YQ0, RU000A101SF3, RU000A103FC3, RU000A1057S2, RU000A102EF1, RU000A102EE4, RU000A0JTYL2, RU000A0JTS06, RU000A0JTS22, RU000A0JTYM0, RU000A0JTYN8, RU000A0JUFU0, RU000A0JV1W5, RU000A0JV1X3, RU000A0JV1Y1, RU000A0JUCS1, RU000A0JUCR3, RU000A0JUFV8, RU000A0JV201, RU000A0JV219, RU000A0JV235, RU000A0JV243, RU000A0JV250, RU000A0JV268, RU000A0JV227) are expected to be revised within one year following the publication date of this press release.
The credit ratings were assigned based on data provided by Rosneft, information from publicly available sources, and ACRA’s own databases. The credit ratings are solicited and Rosneft participated in their assignment.
In assigning the credit ratings, ACRA used only information, the quality and reliability of which were, in ACRA’s opinion, appropriate and sufficient to apply the methodologies.
Disclosure of deviations from approved methodologies: the sub-factor Qualitative Assessment of Leverage was assessed with a deviation from the Methodology for Credit Ratings Assignment to Non-financial Corporations Under the National Scale for the Russian Federation: the assessment score was set at the maximum level despite the forthcoming debt repayment peak in 2023 because this peak, in the Agency’s opinion, does not bear risks for the Company in view of the size of EBITDA, funds accumulated on the balance sheet, and the Company’s access to sources of financing.
ACRA provided no additional services to Rosneft. No conflicts of interest were discovered in the course of credit rating assignment.
