July 16 - Standard & Poor’s Ratings Services said today that it had assigned its ‘BBB’ rating to the sixth series of senior loan-participation notes (LPNs) issued on July 5, 2012, by Russia-based Vnesheconombank (VEB; foreign currency BBB/Stable/A-3; local currency BBB+/Stable/A-2) via VEB Finance PLC. The LPNs’ nominal amount is $1.0 billion and they form part of VEB’s large LPN program. The notes have a 10-year maturity and a fixed 6.025% interest rate paid semiannually.
The ratings on the notes are equalized with the long-term foreign currency issuer credit rating on VEB.
The long-term ratings on VEB are equalized with those on the Russian Federation (foreign currency BBB/Stable/A-2; local currency BBB+/Stable/A-2; Russia national scale ‘ruAAA’), reflecting our view of an “almost certain” likelihood that the Russian government would provide timely and sufficient extraordinary support to VEB if necessary.
In accordance with our criteria for government-related entities, our view of an “almost certain” likelihood of extraordinary government support is based on our assessment of VEB‘s:
-- “Critical” role to the Russian Federation as the prime public development institution of the government, which cannot be readily undertaken by a private entity; and
-- “Integral” link with the Russian Federation. This is because of VEB’s special status as a state corporation with strong oversight from the federal government and its proven track record of adequate extraordinary financial support in all circumstances.
As a result, the foreign currency credit rating on VEB is three notches higher than its stand-alone credit profile (SACP), which we currently assess as ‘bb’. The SACP is based on the ‘bb’ anchor and our assessment of the bank’s “strong” business position, “moderate” capital and earnings, “moderate” risk position, “above average” funding, and “adequate” liquidity, as our criteria define these terms.
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-- European Legal Criteria For Structured Finance Transactions, Aug. 28, 2008