Gazprom is the state-controlled Russian oil and gas company. The Chinese credit rating agency CSCI Pengyuan, has given it a triple-A domestic rating.
Reuters reported that this top-tier credit rating was announced Friday amid increasing speculations and media reports indicating Beijing’s active preparation to give major Russian energy companies renewed access to the domestic bond market.
Gazprom is a key player on the energy scene in the world. However, the sanctions that have been imposed upon it by Western countries, such as the US which blacklisted them, are causing significant challenges.
A triple-A credit rating by a Chinese company like CSCI Pengyuan, a well-known agency in China, could be a lifeline for Gazprom. It would allow it to access capital from China and reduce some financial pressures resulting from Western sanctions.
China and its strategic implications
The move highlights the growing economic relationship between China and Russia in particular the energy sector as both countries seek to navigate through a geopolitical landscape that is complex.
Gazprom would be able to access China’s massive domestic bond market, which could reduce its dependence on Western financial markets and institutions.
This development has far-reaching implications, and could reshape energy flows on a worldwide scale.
CSCI Pengyuan said:
The rating of Gazprom reflects the strategic importance it holds and its legal connections with the Russian Government.
According to the company’s statement, its strong credit rating is based on the firm’s business profile as the market leader of the oil and gas sector in Russia and the key player in that market.
After Russia and China approved Power of Siberia 2, the rating “AAA” with stable outlook has been granted.
Gazprom made the announcement during Russian President Vladimir Putin’s visit to China.
Panda bonds, Renminbi and internationalisation
Financial Times reported on Sunday that senior Chinese regulators, citing reliable sources, recently expressed their intention to assist top Russian energy firms in the issuance of “panda bond” denominated in renminbi.
China is increasingly playing a role in providing an alternative market to countries that have limited access to Western capital markets.
This could be a new way for Russian energy companies to raise capital and diversify their sources of funding, reducing the reliance they have on US dollars and Euros.
The development is also a sign of China’s ambitions to make the renminbi a prominent currency for global trading and reserve.
Support from Chinese regulators indicates a strategic alliance aimed at strengthening bilateral economic relations and navigating through the complexity of the geopolitical environment.
Companies in China generally obtain credit ratings before issuing bonds.
CSCI Pengyuan emphasized “high geopolitical risk” associated with Gazprom. The company was sanctioned by the US after Russia invaded Ukraine in 2022.
Rating agency reports that company revenue from gas exports and the volume of those sales decreased by 2023. The rating agency attributed this decline to geopolitical and sanctions-related disruptions.
Operational uncertainties continue to persist as the geopolitical environment continues to change.
CSCI Pengyuan has given Zarubezhneft a “AAA”, or A-rated, credit rating. It is a Russian oil midscale company that owns the entire business.
As new information becomes available, this post Russia’s Gazprom receives triple-A ratings from Chinese agency will be updated.
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