Globally. Ahead of Events.
Credit Rating Agency
Dear Friends and Colleagues, RusRating – above all – is a team of top professionals committed to strictly upholding the norms of professional ethics. Today we are Russia’s fastest-growing rating agency, in terms of both client numbers and the number of employees.
constant and strenuous development: reinforcing our team with the best analysts, perfecting our methodologies, adopting cutting edge IT solutions, and developing international ties in order to ensure maximum quality, balance and transparency in our assessments.
Our goal is to become a full player in the global ratings market. For us that means
Alexander Zaitsev Chairman of the Board, RusRating
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MESSAGE FROM THE CHAIRMAN OF THE BOARD
T H E CO M PA N Y
The Company RusRating is an independent rating agency that was set up in 2001 by Richard Hainsworth, then the Russia representative for Thomson Bank Watch. In 2013 the agency was sold to Alexander Zaitsev. In 2015 Zaitsev was joined by a second investor, Sergei Ablyaev, who became the company’s General Director. RusRating’s primary services are assessing creditworthiness and assigning ratings to banks, finance companies, real sector firms, regional and local governments, as well as their bond issues. We also provide analytical services and publish annual overviews of various sectors of the economy.
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Our clients include leading Russian and foreign financial institutions such as the IFC, KfW Bankengruppe, Landesbank Berlin, Credit Agricole CIB, ING Commercial Banking, OCBC, Scotiabank and others. The agency has been accredited by the Russian Ministry of Finance and is a member of the European Association of Credit Rating Agencies (EACRA). In the summer of 2013 RusRating became a co-founder of the Universal Credit Rating Group, a joint enterprise with its head office in Hong Kong. Our partners are Dagong (the largest rating agency in China) and the American rating agency Egan-Jones.
M I S S I O N A N D G OA LS
Our Mission RusRating sees its mission as promoting the advantages of local (national) ratings and improving transparency in the methodologies used for analysing financial risk.
Our Goals To uphold the highest professional and ethical standards To provide the market with objective analysis of banks, companies and various sectors of the economy To promote the development of a reliable, honest and transparent financial market in Russia
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R ECO G N I T I O N S A N D AC C R E D I TAT I O N S | M E D I A PA RT N E R S H I P S
Recognitions and Accreditations Our ratings are used widely by government ministries and agencies, state corporations, financial market participants, banks and companies as a criteria for evaluating counterparty creditworthiness and
WHO TRUSTS OUR RATINGS? • Russian Ministry of Finance • Russian Ministry of Economic Development
taking decisions about the allocation of funds, participation in various investment projects, tenders and competitions. The Moscow Exchange accepts our ratings as a listing criteria.
• Central Bank of Russia • Vnesheconombank (VEB) • SME Bank • Moscow Exchange • National Securities Market Association • Rosnano
Media Partnerships Our ratings and commentaries by RusRating specialists are published in the foreign media and on international business websites such as Bloomberg, Reuters, Interactive Data, Internet Securities, Scope Ratings, EACRA (European Association of Credit Rating Agencies), Euromoney and the Financial Times. Domestic media who publish our content include newspapers and websites such as Kommersant,
• Residential Mortgage Loan Agency
Vedomosti, Gazeta.ru, Banki.ru, Business Express, Bankir.ru, Banks and Finance, Profil, Sekret Firmy, RBK, Bankovskoye Delo, Banki i Delovoi Mir, Bankovskoye Obozreniye and SputnikNews. Press releases about new ratings and rating changes are sent to leading publications and electronic media, as well as a wide range of financial market participants.
Media Citations of RusRating January 2014-February 2015 Data provided by Integrum
500 450 0 0 400 0 350 300 0 250 0 0 200 0 150 100 0 50 0 0 January nuary 2014
February 2014
March 2014
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April 2014
Мay 2014
June 2014
July 2014
August September October November December January 2014 2014 2014 2014 2014 2015
February 2015
P RO DU C TS A N D S E RV I C E S
Products and Services
Express analysis
Ratings
Analysis
A rating is an indicator that – in a rating agency’s opinion – provides an assessment of the rated entity at a particular point in time or for a particular period. A variety of ratings can be assigned, including evaluations of credit risk, corporate governance, reliability, investment attractiveness, quality of risk management, and others.
Credit ratings Industry overviews
A credit rating expresses the agency’s view of the credit risks associated with a company or issuer, its ability to meet its financial obligations to creditors on time and in full.
Reliability ratings
A reliability rating expresses the agency’s assessment of a company’s financial stability, the likelihood that its current and future obligations will be met in full. Ratings of this type are applied to companies that make little or no use of debt financing.
Express Analysis Before signing a rating contract we perform an express analysis that provides a preliminary assessment of a bank’s or company’s creditworthiness, i.e. sets the likely upper and lower boundaries of its final rating (for example: “between B+ and BB-” or “between CCC and B-”). There is no way to determine a precise rating without performing detailed analysis. RusRating’s express ratings are confidential and are not distributed in any form.
Number of Ratings Assigned January 2010-January 2015 RusRating data
120
100 contract ratings 80
non-contract ratings
93
60
40
48
69
38
37
37
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18
20
19
19
18
January 2010
January 2011
January 2012
January 2013
January 2014
January 2015
20
0
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W H Y A RAT I N G ?
Why a Rating? The freedom to choose in a market economy must be backed by confidence in your partners’ trustworthiness. Internal evaluation may not be enough to ensure a sound decision: sometimes an independent, expert opinion is needed. In today’s world this role is often played by a system of ratings.
Ratings are a compact but meaningful way to describe a company’s current creditworthiness (reliability) and probable future trends. As indicators, they guide business decisions and shape the future of partnerships.
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New opportunities to access capital
Advantage in competitive bidding
Investor and client trust
Regulatory requirements
Independent risk assessment
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Strengthen business image
PR-effect
Use of Ratings A rating of “BB” or higher allows a company to reduce its cost of funds and/or gain access to additional funding. Ratings at that level reduce the amount of capital banks are required to set aside against a loan in order to satisfy the N1 prudential ratio. A rating of “BB” or higher allows a bank to participate in Central Bank of Russia auctions without making a deposit to access uncovered loans for a periods of five weeks or more.
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A rating of “BBB-” or higher on the national scale qualifies a security for a top-level listing on the Moscow Exchange. A rating of “BBB-” or higher (“BB+” or higher if obligations are guaranteed by a Russian regional government) qualifies a bank to work in partnership with state-owned SME Bank under small- and mid-sized business support programmes.
AS S I G N I N G A RAT I N G
Rating Conditions A company that wants a rating signs a one-year contract that commits it to providing our agency with certain information (similar to the information that would be required to obtain a bank loan). As well as the rating itself the process involves preparation of a report that explains the basis for that rating and describes the current state of affairs at the company being analysed. During the year the company will receive one detailed report and quarterly monitoring reports that identify any changes.
The full report is 12-20 pages in length and is prepared once each year using a methodology specially developed for the purpose. Quarterly reports review updated financial data and analyse major events. All conclusions, descriptions and assessments provided in the full report are reviewed in detail and confirmed or adjusted accordingly.
Rating Report The annual rating report includes: • a description of the rated entity • an overview of its financial condition • the rating and rating basis • key financial indicators • strengths and weaknesses • major events RusRating retains the right to assign a rating and formulate the report content independently, even if the company that initiated the rating process disagrees with its conclusions. In such cases the client has the right to request the agency not to publish the rating or distribute the report for a period of one year.
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AS S I G N I N G A RAT I N G
The Rating Process A rating contract is assigned for one year. Within the first 30 working days the agency performs an analysis of the rated entity, based on part on financial data provided by the client. Once the analysis is complete the agency prepares a detailed report that forms the basis for assigning a rating. This report is provided to the client for review, after which the rating is added to our ratings list.
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Rating contract signed
A press release about the new rating is sent out to the client, market participants and the media. Reports are prepared in two languages, Russian and English. Ratings are assigned simultaneously on both the national and international scales.
Analysis of information provided, preparation and editing of rating report
A client has the right to request that its rating not be published. Such non-public ratings do not show up in our ratings list and are not disclosed to third parties. They may not be used for regulatory or any other purposes. RusRating respects our clients’ confidentiality in all dealings with the agency.
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Request for additional information
Company provides information needed for rating in accordance with list we provide
Rating committee meeting
Appeal in case of disagreement
Rating interview with company management
Report submitted to client for review
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Publication of rating report if client accepts rating and agrees to publication
RAT I N G S C A L E
Rating Scale INVESTMENT LEVEL
INTERNATIONAL Very high creditworthiness. Financial condition judged solid and stable. Country risk low or absent. High creditworthiness. Financial condition judged solid and stable. Country risk low. High creditworthiness. Financial condition judged solid and stable. Country risk high.
SUFFICIENT LEVEL
Relatively high creditworthiness. Financial condition judged solid and stable.
AAA AA+ АА ААА+ А АВВВ+ ВВВ BВВВВ+
Average creditworthiness. Financial condition judged satisfactory and stable.
Creditworthiness slightly below average. Financial condition judged satisfactory and stable.
SPECULATIVE LEVEL
NATIONAL
Below average creditworthiness. Key financial indicators are judged satisfactory but their stability is open to question. Low creditworthiness. Key financial indicators are close to satisfactory but stability is low.
ВВ ВВВ+ В В-
ААА АА+ АА ААА+ А АВВВ+ ВВВ ВВВВВ+ ВВ ВВВ+
High creditworthiness relative to other Russian borrowers. Financial condition judged solid and stable. Comparatively high creditworthiness relative to other Russian borrowers. Financial condition judged satisfactory and stable. Creditworthiness slightly above average relative to other Russian borrowers. Financial condition judged satisfactory and stable. Average creditworthiness relative to other Russian borrowers. Financial condition judged satisfactory and stable.
ССС+ ССС ССС-
В В-
Acceptable creditworthiness relative to other Russian borrowers. Key financial indicators are judged satisfactory but their stability is open to question.
CC
ССС+ ССС ССС-
Creditworthiness below average relative to other Russian borrowers. Key financial indicators are close to satisfactory but stability is low.
Unacceptably low creditworthiness. Financial condition is unstable and unsatisfactory. In the event of liquidation net assets likely positive.
C
СС
Bankruptcy.
D
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Maximum possible creditworthiness for a Russian borrower. Financial condition judged solid and stable.
Low creditworthiness. Financial condition is unstable and unsatisfactory. In the event of liquidation net assets likely positive. Bankruptcy.
M A N AG E M E N T
Management Alexander Zaitsev, Chairman of the Board Has 15 years’ experience in the financial markets. At various times held management positions with leading Russian investment companies such as Troika Dialog, Uralsib and Kapital. Before becoming RusRating CEO in 2013 was Director of International Client Services
at Sberbank CIB and headed the Russia Infrastructure Finance project. Graduated from the National Research University Upper School of Economics with a degree in finance and securities markets, holds a senior economics degree and an MBA from Skolkovo.
Sergei Ablyaev, Chief Executive Officer Has held senior positions in banking for more than 20 years, including from 2011-2014 Deputy Chairman of the Central Bank of Russia’s Moscow arm. Graduated from the Moscow Finance Institute and holds a doctorate
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in economics. Author of several academic works related to finance (including eight books, among them text books and study guides, as well as numerous articles). Lectured at the Russian Federation Government Academy of Finance and the Russian Academy of Entrepreneurship.
M A N AG E M E N T A N D K E Y A N A LYSTS
Key Analysts Alexander Ovchinnikov, Head of the Analysis Department Began career at the Central Bank in 1993, where over the period to 2000 he was involved in a wide range of projects aimed at developing a domestic debt market. Continued career at major Russian banks and investment companies, including Troika-Dialog, International Investment Bank and Sberbank CIB.
Graduated from the Russian Federation Government Academy of Finance with a degree in international economic relations, also holds a Russian technical degree and degrees in finance from Carnegie Mellon University and Russia’s Academy of National Economy.
Anton Tabakh, Director of Regional and Infrastructure Project Ratings Before coming to RusRating from December 2013-November 2014 senior economist with the Institute of Energy and Finance, 2011-2013 senior analyst with Uralsib Capital, 2008-2010 senior analyst with Troika Dialog, 1998-2007 economist (developing markets) with the New York and Moscow offices of AllianceBernstein, a management company.
Holds a bachelor’s degree in economics from the University of Missouri, an MBA from the University of Illinois and a senior Russian economics degree, Chartered Financial Analyst. Currently a lecturer with the National Research University Upper School of Economics.
Larisa Makarenko, Director of Bank Ratings In finance since 1992, has experience with the USSR State Statistics Committee and in the banking sector. More than 14 years’ analytical experience, including with
both theoretical and practical aspects of evaluating banking risks. Holds senior economics degree.
Elena Nikolayenko, Director of Methodology 14 years in banking and 9 years in the rating business provide unique experience and knowledge in these areas. Graduated from the G.V. Plekhanov Russian Academy
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of Economics with a degree in finance and credit, also holds an Institute of Commercial Management certificate.
OU R C L I E N TS
Our Clients
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R U SRATING — AN INDE PE NDE NT RATI NG AGE NCY
© 2015 RusRating, 119435 Moscow, Bolshoi Savvinski per., d. 12, str. 9, +7 (495) 771-7226, email: info@rusrating.ru. All rights reserved. Any reproduction of this material, in part or in full, without permission of the copyright holder is forbidden. In assigning and maintaining ratings the agency draws on factual information received from other corporate bodies, including issuers and underwriters, as well as public sources that, in the agency’s opinion, may be considered reliable. The agency is not an auditor and is not responsible for the content or accuracy of that information or for the means by which third-party sources accessed that information. The agency is aware that information presented in its reports may be affected, both objectively and subjectively, by new circumstances or conditions that emerge after a report’s publication; new information of this nature could not have been taken into consideration at the time of publication. All of the agency’s ratings are based on both financial and qualitative analysis that provides an integrated assessment of the likelihood of risks being realised and/or a qualitative assessment and/or some other opinion of the rated entity. The agency is an independent company and is not the subsidiary or authorised representative of any other body. It is not managed in trust and is not required to act on behalf of or in the interests of any third parties. It is not an investment consultant. The opinions expressed by the agency, whether in its reports or in any other form, do not constitute a recommendation to buy, sell or hold to maturity any securities, nor do they form the basis for any investment or other decisions. The agency’s opinions, ratings and the contents of its reports do not replace other sources of information, experience or capacity for judgement on the part of rating users and third parties with respect to independent investment and business decisions. All of the agency’s reports represent the work of multiple authors. Any individuals identified in a report took part in developing the expressed opinions but bear no personal responsibility for them and are named solely for the purpose of serving as contacts. In publishing its reports and other ratings the agency does not assume any new obligations to third parties or responsibility for losses resulting from the preparation or publication of its reports and ratings, nor are its existing obligations altered or reduced in any way. The agency may be remunerated for carrying out its analysis and assigning a rating, including by another corporate body, issuer or underwriter. As an independent entity it reserves the right to establish its own procedures and approaches for the distribution of material, including the publication of ratings and other information, and also has full editorial control of the content of its reports, assessments, commentaries and any other related publications.
RusRating Client Services Department: +7 (495) 771 7226 E-mail: sales@rusrating.ru www.rusrating.ru