Special commentary on FGC UES H1 2012 results

Bonds of FGC UES
We deem Series 13 oversold and expect the spread will narrow to at least 160 b. p. from the current 180 b. p. Long-term Series 25 is also traded with an overstated premium to OFZ and, therefore, can also be attractive for investors with long-term funding.

Key points:
• FGC UES is a quasi-state company with a state share of 79.55%.
• The company’s debt is mainly made up by long-term loans (weighted average duration is 4.1 years).
• Net debt/EBITDA ratio increased to 1.6х in H1 2012 against 1.3х at the year’s start.
• In October 2012 the volume of unused credit lines totalled 112.5 billion rubles.
• The company’s revenue for the first 6 months 2012 amounted to 67 billion rubles, -6% y/y.
• H1 2012 EBITDA totalled 37.8 billion rubles, -17% y/y.
• H1 net profit amounted to 3.9 billion rubles against 43.9 billion rubles for the same period last year.