Moody's rates Russian Standard loan notes Ba3

Moody's Investors Service said it assigned a Ba3 rating with stable outlook to the issue of loan participation notes by Luxembourg-based special purpose vehicle Russian Standard Finance SA for the sole purpose of funding a subordinated loan to Russian Standard Bank.

The rights under the present loan will be subordinated to the claims of senior creditors, although they will rank pari passu with other subordinated debt and be senior to the claims of holders of the bank's share capital, including preference shares, the agency said.

The amount of the issue is $200 million with a maturity of 10 years and a prepayment option by the borrower after five years. Coupons will be paid on a semi-annual basis at a fixed rate during the initial interest term and at an increased rate during the step-up interest term.

Moody's noted that as one of the financial covenants, the bank is obliged to maintain a ratio of capital to risk-weighted assets at a pre-specified level inversely related to its ratings. While the likelihood of any of the above covenants being triggered is relatively low, any occurrence could potentially have adverse liquidity implications for the bank and might exert additional downward pressure on its ratings.

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