S&P gives Federal Grid bonds ruA+

Standard & Poor's said it assigned its ruA+ Russia national-scale rating to the proposed Russian ruble 6 billion series 4 senior unsecured bonds due 2011 to be issued by Federal Grid Co. of the Unified Energy System (B+/positive, Russia national-scale ruA+).

The agency said that the company plans to use the proceeds to partially fund its investment program.

S&P noted that the ratings on Federal Grid are constrained by the ratings on its parent, RAO UES of Russia (B+/Developing, Russia national-scale ruA+), which has a lower stand-alone credit quality from which the company is not fully ring-fenced.

The ratings on the company also reflect exposure to the risk of operating in a transition economy in Russia, the short track record of its evolving regulatory framework and its significant and partly debt-financed investment needs.

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