June 27, 2008 | Cbonds
|MOSCOW (Standard & Poor's) June 27, 2008--Standard & Poor's Ratings Services said today that it had raised its long-term counterparty credit rating on Russian securities firm Investment Company Veles Capital LLC (Veles) to 'B-' from 'CCC' and affirmed the short-term 'C' rating. The outlook is stable. At the same time, the Russia national scale rating was raised to 'ruBBB' from 'ruBB-'. |
"The upgrade reflects Veles' longer track record of adequate financial performance and its decreased credit exposure to financing related-party investment projects, alleviating high credit and information risks," said Standard & Poor's credit analyst Eugene Tarzimanov. "Other supportive factors include the company's leading position in the veksel, or domestic promissory note trading market, and stable management."
The ratings remain constrained by the company's high exposure to the volatile Russian capital markets, relatively weak revenue diversification, barely adequate capitalization, and opaque profit allocation among unconsolidated group entities. The risk management function is strengthening, but still remains weak by international standards.
The ratings on the company mirror its stand-alone credit quality, and do not include any uplift for extraordinary support.
We expect Veles to maintain its strategy, focusing on its core competencies in securities trading and brokerage.
"The company could be upgraded if it strengthens and diversifies its revenue base while posting adequate financial performance and improving risk management," said Mr. Tarzimanov. "An upgrade might also follow a material capital increase, which could better protect the company in a volatile market environment."
Failure to diversify business flows and revenues, and a reversal of its policy to stop financing related-party projects could lead to negative rating actions.
Company: Veles Capital
|Full company name||Veles Capital|
|Country of risk||Russia|
|Country of registration||Russia|