Standard & Poor's raises Russian Railways' rating to BBB-

MOSCOW, October 11 (RIA Novosti) - International rating agency Standard & Poor's announced Tuesday it was raising its long-term issuer credit rating on Russian Railways (RZD), the country's railroad monopoly, from "BB+" to "BBB-" with a stable outlook.

At the same time, the rating was removed from CreditWatch, where it had been placed on September 22, 2005, due to improvements in the company's business profile, an S&P's news release said.

In addition, Standard & Poor's affirmed its "ruAA+" Russia national scale rating on RZD.

S&P's credit analyst Eugene Korovin said: "The upgrade, which moves the company from the high-yield category to investment-grade, reflects RZD's improved business profile due to continued growth in national demand for rail transportation, driven by economic development and an improving regulatory framework."

"In the medium term, RZD expects to improve its operating performance thanks to the anticipated transfer of loss making rail-passenger operations to a directly state-owned company, which should also gradually eliminate cross-subsidies from the freight segment," he added.