ACRA Affirms AAA(RU) Rating for VEB.RF and Bond Issues with Stable Outlook
Analytical Credit Rating Agency affirmed the credit rating of State Development Corporation “VEB.RF” at AAA(RU) with a stable outlook. According to the ACRA methodology, the credit ratings of VEB.RF’s bond issues (RU000A100GY1, RU000A100BM7, RU000A1004U0, RU000A1003W8, RU000A1001V4, RU000A0ZZZP3, RU000A0JXU48, RU000A0JXU71, RU000A0ZYLH3, RU000A0ZYLJ9) are equivalent to that of VEB.RF, i.e. AAA(RU).
ACRA’s press release says that the credit rating of VEB.RF is assigned at the level equivalent to financial obligations of the Russian government “based on a very high probability of the extraordinary support from the government due to its high systemic importance for the Russian economy and essential state influence on VEB.RF’s creditworthiness.”
ACRA’s analysts point out that VEB.RF is not a commercial bank and engages in national projects. VEB.RF is a development institution operating with a unique legal mandate for the financing of strategic investment projects that cannot be delivered by commercial banks due to high risks and regulatory factors. VEB.RF has a considerable scale of operations in the Russian economy with its assets accounting for around 20% of the federal budget expenditures in 2018. ACRA believes that currently VEB.RF’s functions cannot be transferred to other state or private organisations.
Furthermore, ACRA recognises the stabilisation of VEB.RF’s financial results and gradual improvement of its debt profile. Given the budgeted financing, a high probability of additional financial backing from the government, and the financial institution’s own resources, ACRA believes that VEB.RF will have no problems with honouring its obligations unless there are serious external shocks.
VEB.RF issued short-term bonds in additional placements to companies and corporations on 10, 11 and 12 July 2019.
The Bank raised 12 billion roubles, including 10 billion roubles from bonds with a maturity of 14 days and a coupon of 7.28% p.a., 1 billion roubles from bonds with a maturity of 21 days and a coupon of 7.27% p.a., and 1 billion roubles from bonds with a maturity of 28 days and a coupon of 7.27% p.a.
The par value of one bond is 1,000 roubles. The bonds were sold at 100% of their par value. The coupon is payable at maturity.
The arranger of the bond issue is Gazprombank.
The bonds are on the Moscow Exchange’s Quotation List Level 1. The depository is National Settlement Depository.