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Fitch Affirms IC Russ-Invest at 'B'; Outlook Stable

January 19, 2012 | Fitch Ratings

Fitch Ratings-London/Moscow-18 January 2012: Fitch Ratings has affirmed Russian-based OJSC Investment Company IC RUSS-INVEST's (IC RUSS-INVEST) Long-term Issuer Default Rating (IDR) at 'B', National Long-term rating at 'BBB-(rus)' and Short-term IDR at 'B'. The Outlooks for the Long-term IDR and National Long-term rating are Stable.

The ratings reflect the high volatility of IC RUSS-INVEST's earnings driven by their significant exposure to Russian market risk and corporate governance concerns specific to a relatively small and lightly-regulated company which is 59%-controlled by its president who is the main decision maker. On the positive side, the ratings reflect the absence of any debt and plans to raise any, at least in the medium term.

IC RUSS-INVEST is effectively a company similar to an investment fund and its activities are largely limited to asset allocation decisions. The company's other activities and business lines are negligible in terms of revenue contribution. The bulk of the company's revenue is generated from the proprietary trading of Russian equities and bonds. However, management is attempting to diversify the company's business through trading on European exchange and developing the brokerage business.

IC RUSS-INVEST's balance sheet was almost 80% equity financed at end-2010 under IFRS, which significantly mitigates the liquidity risk. The cash cushion covered 125% of non-equity funding at end-2010. Liabilities largely consist of dividends payable, which are due to inactive shareholders, amounts due on an overdraft facility with a clearing house and derivative liabilities, which are mirrored by similar derivative assets.

The ratings' upside is currently limited. Downward pressure on the ratings could arise mainly from significant changes in leverage.


Full company namePublic Joint Stock Company "IINVESTMENT COMPANY IC RUSS-INVEST"
Country of riskRussia
Country of registrationRussia
IndustryFinancial institutions


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