The credit rating of PJSC YATEC (hereinafter, YATEC, or the Company) is based on the Company’s very strong market position, very strong business profile, high profitability, low leverage, and good liquidity. At the same time, concentration of production on a single gas field, the size of the Company’s business, and low coverage have a constraining effect on the rating.
YATEC is an independent gas producing company with total residual geological gas reserves of 659 bcm and natural gas resources of 1,142 bcm. The Company’s share of gas produced in the Republic of Sakha (Yakutia) (hereinafter, Yakutia) is 86%. The Company holds rights for 10 license areas: Srednevilyuisky, Mastakhsky, Tolonsky, Tymtaydakhsky, Severny, Yuzhny, Maysky, Sobolokhsky, Bappagai, and Tingnary.
Key assessment factors
Very strong assessments of market position and business profile. YATEC, which occupies 86% of the regional natural gas production market, is the only company that supplies gas to the Yakutia’s central regions and the city of Yakutsk. The very strong business profile of the Company is due to very low production costs and very high sufficiency of the resource base.
The weak assessment of geographic diversification is mainly due to the concentration of production on a single gas field. Yakutia is the Company’s only natural gas sales market. The Company also supplies gas condensate and liquefied hydrocarbon gas to 16 Russian regions and exports its products to foreign countries. The Company is developing new export destinations — currently products are supplied to Kyrgyzstan, Mongolia, Uzbekistan, China, and North Korea.
Low leverage and low coverage. According to ACRA’s estimates, the weighted average ratio of total debt to FFO before net interest payments will be 3.1x for 2021–2026. The Agency expects the ratio of weighted average FFO before net interest payments to interest payments to be 2.9x for 2021–2026. The Agency expects the Company to downsize its investment program aimed at development and focus on maintaining existing capacities.
Strong liquidity. As of February 21, 2024, the Company had a free credit line totaling RUB 1 bln, as well as internal funds in the amount of RUB 2.8 bln.
Key assumptions
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Annual gas production volume at no less than 1.9 bcm;
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Investment program to be funded without an increase in leverage.
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 positive rating action may be prompted by:
- Weighted ratio of total debt to FFO before net interest payments declining below 2.0х, and weighted ratio of FFO before net interest to interest growing above 10.0х.
A negative rating action may be prompted by:
- Weighted ratio of total debt to FFO before net interest payments exceeding 3.5х.
RATING COMPONENTS
Standalone creditworthiness assessment (SCA): a.
Adjustments: none.
Issue ratings
PJSC YATEC (ISIN RU000A102ZH2), maturity date: April 7, 2025, issue volume: RUB 5 bln, volume in circulation: RUB 4 bln — A(RU).
PJSC YATEC (ISIN RU000A1070L0), maturity date: October 9, 2026, issue volume: RUB 6 bln — A(RU).
Rationale. The issues represent senior unsecured debt of the Company. 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 the Company in terms of priority. According to ACRA’s methodology, based on the detailed approach, the recovery rate for the unsecured debt belongs to category I, therefore, the credit ratings of the issues are equivalent to that of the Company, i.e. A(RU).
Regulatory disclosure
The credit ratings of PJSC YATEC and the bond issues (ISIN RU000A102ZH2, RU000A1070L0) of PJSC YATEC have been assigned 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 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.
The credit ratings of PJSC YATEC and the bond issues (ISIN RU000A102ZH2, RU000A1070L0) of PJSC YATEC were published by ACRA for the first time on April 30, 2020, April 12, 2021, and October 13, 2023, respectively. The credit rating of PJSC YATEC and its outlook, as well as the credit ratings of the bond issues of PJSC YATEC, 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 PJSC YATEC, information from publicly available sources, and ACRA’s own databases. The credit ratings are solicited and PJSC YATEC 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.
ACRA provided additional services to PJSC YATEC. No conflicts of interest were discovered in the course of credit rating assignment.
