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Moody's assigns definitive rating to VTB Capital Finance LLC -- Bonds, Series 05

December 14, 2012 | Moody's Investors Service

RUB 1.0 B of debt securities affected


London, 14 December 2012 -- Moody's Investors Service has assigned the
following definitive rating to bonds issued by VTB Capital Finance LLC

Issuer: VTB Capital Finance LLC

....Series 05: RUB 1.0 B Interest --Bearing Non-convertible Bearer
Untranched Bonds with Index Linked Coupon Secured by Surety due 2013,
Assigned Baa1 (sf)



The Bonds are issued by the VTB Capital Finance LLC, a non-bankruptcy
remote limited liability company duly incorporated and registered as a
legal entity in the Russian Federation. It is a subsidiary of the OAO
(JSC) VTB Bank(the "Surety Provider"). The Surety Provider is the
second-largest bank in Russia in terms of total assets and capital.



The Bonds benefit from an irrevocable, unconditional and validly existing
Surety issued by the Surety Provider. Issuer delinquency that triggers
claims under the Surety includes non timely payment of either the
principal, fixed coupon or variable coupon.



The Series 05 is the sixth of 12 separate Series secured by the Surety
from the Surety Provider on the conditions specified in the Decisions on
Issue and in the Prospectus registered by Federal Financial Markets
Service of Russian Federation on 28 December 2011.



RATINGS RATIONALE



The rating addresses the ability of the Issuer to fulfil its obligations
according to the terms of the Bonds to pay (a) 100% of the principal par
amount on the early redemption date (December 2013), (b) a fixed coupon
amount on each coupon payment date prior to and including the early
redemption date (December 2013), and (c) a potential additional coupon
amount on the early redemption date (December 2013), which is based on a
formula referring to the gold prices and RUB/USD CME/EMTA reference
rates. Because the calculation of the early redemption coupon is based on
the future gold prices and RUB/USD CME/EMTA reference rates, the variable
coupon payment may vary.



The rating is based primarily on the support provided by the Surety
Provider, and is directly linked to its Moody's senior unsecured debt
rating. Accordingly, any change of such rating of the Surety Provider
could cause a corresponding change to the rating of the Bonds.



The rating of the Bonds takes into account that: (1) the terms of the
Bonds specify the senior and unsubordinated status of the Bonds, (2) the
terms of the Bonds require the full return of the Bonds' principal and
(3) the Bonds are being offered at par of the Bonds' principal amount.



Moody's mainly relied on the obligations, investigations, representations
and warranties of the Surety Provider and the agents of the Issuer. No
cash flow analysis or stress scenarios have been conducted as the rating
was directly derived from the rating of the Surety Provider.



All the transactional documentation is governed by the Laws of the Russian
Federation. The legality, validity and enforceability of the obligations
undertaken by the Issuer and the Surety Provider (including
irrevocability and conclusiveness of the Surety) were confirmed by the
transaction legal opinions made available to Moody's.


Issue: VTB Capital Finance, 05

StatusCountry of riskMaturity (option)AmountIssue ratings (M/S&P/F)
early redeemedRussia12/02/20221,000,000,000 RUB-/-/-

Company: VTB Capital Finance

Full company name"VTB Capital Finance" Limited Liability Company
Country of riskRussia
Country of registrationRussia
IndustryFinancial institutions

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