Home / Industry / Energy /  CARE Ratings puts Rosneft-backed Nayara Energy under credit watch
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NEW DELHI : CARE Ratings on Monday put Nayara Energy's long terms bank facilities under credit watch with negative implications due to sanctions imposed on Russia.

The sanctions are expected to impact Nayara as Russian energy major Rosneft is a shareholder in the company with 49.13% stake.

In a statement, Care Ratings said that it has put two long term facilities worth 5,502.46 crore and 11,647.04 crore under "credit watch with negative implications". Both the bank facilities have been assigned the 'CARE AA'.

"CARE Ratings has placed the long-term ratings of Nayara on ‘credit watch with negative implications’ on account of the Russian invasion of Ukraine and the resultant economic sanctions being placed on Russia and certain Russian entities and persons," it said.

The ratings agency noted that it will continue to monitor the situation and take a rating action in case of any adverse impact of the war on Nayara’s shareholders and consequent impact of the same on Nayara. It, however noted that at present, the company does not have any major operational dependence on Russia or any of the Russian entities.

It said that the ratings factor in the strong market position of its shareholders – Rosneft Singapore Pte Limited, a subsidiary of Rosneft Oil Company and Kesani Enterprises Company Limited, a consortium comprising Trafigura and United Capital Partners (UCP) investment group, each having 49.13% shareholding, and their continuous support to Nayara, including the recent fund infusion of $490 million by the shareholders and the resultant improvement in the company’s capital structure and liquidity profile.

"The ratings assigned to the bank facilities and debt instruments of Nayara Energy Limited continue to derive strength from the strong operating profile of the company as it operates India’s second-largest single-location refinery with high Nelson Complexity Index (NCI), the strategic location of its refinery along with captive port terminal and power plant, healthy throughput levels," it said.

CARE Rating also considered the strong risk management systems put in place by Nayara to hedge against fluctuation in currency and crude oil prices, while its presence in retail provides stability to the company’s revenue stream and insulates the business from vagaries of fluctuation in the refining segment.

It also said that any adverse impact of geopolitical situation on the operations of the company or its shareholders may lead to a negative rating for the company.

The US and European Union have imposed several sanctions on Russia after its invasion of Ukraine. Although, no sanctions have so far been imposed on Russian oil, there are concerns that such sanctions may come soon.

US Secretary of State Antony Blinken during an interview on Sunday said: “We are now talking to our European partners and allies to look in a coordinated way at the prospect of banning the import of Russian oil, while making sure that there is still an appropriate supply of oil on world markets." 

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