MOSCOW (MRC) -- Moody's Interfax Rating Agency, which is majority-owned by Moody's Investors Service (MIS), has placed on review for downgrade the Aa3.ru national scale ratings (NSRs) of PJSC Nizhnekamksneftekhim (NKNK), reported the ratings agency in its press release.
This decision to place NKNK's NSR on review for downgrade reflects the ongoing severe and rapid deterioration in the operating environment in Russia and the heightened risk of a more prolonged and more acute economic downturn than originally anticipated.
This action follows Moody's decision on Monday 22 December to lower Russia's foreign currency bond ceiling to Baa2 from A3, foreign currency deposit ceiling to Ba1 from Baa2 and local currency bond and deposit ceilings to Baa1 from A3.
This action also factors in Moody's decision to place the sub-sovereign rating of the Republic of Tatarstan, NKNK's major shareholder, on review for downgrade on 22 December 2014.
Moody's review for downgrade will assess NKNK's resilience to the increased risk arising from the prevailing negative operating conditions. In addition, Moody's will also consider the need for adjustments to its assumptions regarding the Russian government's willingness to provide support to corporates, in the event of need.
The following factors may place downward pressure on NKNK's rating: severe deterioration of the company's operating environment; deeper and more protracted decline in economic activity in Russia than previously anticipated; deeper and more protracted decline in economic activity in Russia than previously anticipated; the increased likelihood that the Russian government is forced to consider rationing the provision of foreign currency to the economy. A deterioration of the creditworthiness of Tatarstan could also have a negative effect on the company's rating.
Moody's believes there is little likelihood of any upward rating pressure for NKNK unless the operating conditions improve materially. Confirmation of NKNK's ratings could be considered if the economic environment stabilises or corporates show sufficient resilience.
As MRC informed previously, Nizhnekamskneftekhim (part of TAIF) shut down its ethylene production for a scheduled three-week turnaround at night, from 13 to 14 September 2014. Nizhnekamskneftekhim traditionally shuts down its ethylene unit in September for an overhaul. This year was no exception. The plant's annual production is 600,000 tonnes of ethylene.
Based in Nizhnekamsk in the Russian Republic of Tatarstan (Baa3, on review for downgrade), OJSC Nizhnekamskneftekhim ("NKNK") is one of the country's key petrochemical companies, producing rubbers, plastics, monomers and other petrochemicals. NKNK's 10 core production units are located on one site.
Moody's Interfax Credit Rating Agency (MIRA) specializes in credit risk analysis in Russia. MIRA is a joint-venture between Moody's Investors Service, a leading provider of credit ratings, research and analysis covering debt instruments and securities in the global capital markets, and the Interfax Information Services Group. Moody's Investors Service is a subsidiary of Moody's Corporation.