The Board of Directors took notice of the information on Gazprom's debt management strategy, debt structure, costs and mechanisms of financial resources attraction and approved of the ongoing activities aimed at the Company's debt portfolio management.
The meeting noted that the Company continued its efficient work on the debt portfolio management. The key debt ratios are at the same level with the world's leading oil and gas companies and are comfortable for Gazprom.
For instance, the total debt to EBITDA (earnings before interest, taxes, depreciation and amortization) ratio remains low after 6 months of 2012 it equaled 0.9. It is expected that by the end of 2012 it will stay at the current level. The EBITDA to interest ratio is steadily high: according to the results of the first half of 2012, EBITDA was 56 times higher than the interest expenses. In its turn, the debt to equity ratio remains steadily low and in the said period it equaled 21%.
Over the recent years, against the background of the unstable global economy and financial markets, Gazprom has been flexibly diversifying its borrowing policy according to the market behavior. The Company refinances its liabilities, lowering their servicing costs maintains the appropriate level of the debt load, controls the borrowing policies of strategically important companies in Gazprom Group. Moreover the Company manages the liquidity in a flexible way, that is, repays borrowings as soon as practical and deposits the available temporary surplus funds. During a steady surplus period the Company favors a balanced approach to external borrowings.
All of the above mentioned measures help Gazprom retain credit ratings at the investment level, form a debt portfolio structure close to optimal as well as optimize the targeted use and periods of the borrowings raised.
In the future, Gazprom is planning to expand the use of internal borrowings and the cash pooling mechanism prior to external borrowings. Moreover, the Company is going to gradually centralize external borrowings to minimize the fundraising costs. The Management Committee will submit Long Term Borrowing Principles of Gazprom to 2020 to the Board of Directors for approval.