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RPT-Fitch: CBR Stake Sale in MOEX Neutral for NCC's Ratings
July 3, 2014 / 11:52 AM / 3 years ago

RPT-Fitch: CBR Stake Sale in MOEX Neutral for NCC's Ratings

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July 3 (Reuters) - (The following statement was released by the rating agency)

Fitch Ratings says the sale of Central Bank of Russia’s (CBR) stake in Moscow Exchange (MOEX) is neutral for the ratings of its fully-owned subsidiary National Clearing Centre (BBB/Negative).

Yesterday CBR announced it has sold 267 million shares, or 11.8% of its 28.3% stake in MOEX. The deal came a day after the decision to sell was officially announced by CBR. The remaining 16.5% stake in MOEX still held by CBR will be sold through several transactions, as a part of the requirement of the Federal Law No. 251-FZ, dated 23 July 2013, to terminate CBR’s participation in the capital of MOEX by 1 January 2016.

As a result of the transaction, the quasi-government stake in MOEX (and therefore in NCC), held through CBR, state-related banks and a state-controlled investment fund, decreased below 50%. This, however, will not have an impact on NCC’s ratings for two reasons. First, its Issuer Default Rating of ‘BBB’ is achieved based on its high intrinsic strength, without taking into account potential support. Secondly, as we stated in our previous commentary, we do not expect any reduction in the government’s and/or CBR’s propensity to provide support to NCC as a result of the stake sale, leaving the Support Rating Floor of ‘BBB’ unaffected.

In Fitch’s view, the support propensity will remain high, based on NCC’s important role in ensuring the proper functioning of local financial markets and its unique infrastructure. There are also certain support mechanisms put in place by CBR, including unlimited USD/RUB swap lines, a collateralised liquidity facility and a direct repo line, whose provision is not dependent on NCC’s ownership. For more information, see NCC Full Rating Report dated 16 May 2014.

National Clearing Centre’s Outlook was revised to Negative on 24 March 2014, reflecting both a potential weakening of the government’s ability to support and the potential for NCC’s Viability Rating (VR), which is at the same level as the sovereign, to be downgraded due to risks of a worsening operating environment, as NCC is ultimately exposed to the broader Russian economy (see also ‘Fitch Revises 15 Russian Banks’ Outlooks to Negative on Sovereign Change’).

NCC’s ratings:

Long-term foreign and local currency IDRs: ‘BBB’; Outlook Negative

Short-term foreign currency IDR: ‘F3’

Support Rating: ‘2’

Support Rating Floor ‘BBB’

Viability Rating: ‘bbb’

National Long-term rating: ‘AAA(rus)'; Outlook Stable

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