Troika Dialog 'ruA' Rating Remains On CreditWatch Positive Pending Standard Bank Purchase Of Minority Stake
July 30, 2009 Standard & Poor's
• The 'ruA' Russia national scale rating on Troika Dialog Group Ltd. remains on CreditWatch with positive implications, where we placed it following the announcement that Standard Bank of South Africa Ltd. agreed to acquire a 33% shareholding in Troika.
• The outlook on the 'B+' long-term global scale rating remains negative, reflecting the ongoing market challenges.
• If successful, the transaction should counterbalance the negative market pressure with enhanced capitalization and business benefits from Troika's cooperation with the strong partner.
• Upon completion of the transaction, we could raise the Russia national scale rating on Troika by one notch and revise the outlook on the global scale ratings to stable.
PARIS (Standard & Poor's) July 29, 2009--Standard & Poor's Ratings Services said today that it maintained its 'ruA' Russia national scale rating on Troika Dialog Group Ltd., the holding company of Russian investment group Troika Dialog (Troika), on CreditWatch with positive implications, where it had been placed on March 10, 2009. At the same time, we affirmed 'B+/B' long- and short-term counterparty credit ratings on Troika. The outlook on the 'B+' long-term global scale rating is negative.
The continued CreditWatch listing reflects the pending acquisition of a 33% stake in Troika by Standard Bank of South Africa Ltd. (BBBpi). The acquisition is subject to regulatory approvals and is targeted to be completed in September 2009. As a result of the transaction, Troika's equity base is to increase by more than $300 million.
"The CreditWatch placement reflects the potential for an improvement in Troika's creditworthiness, due to the expected capital increase and enhanced commercial and financial flexibility resulting from the strategic partnership and ownership of Standard Bank," said Standard & Poor's credit analyst Ekaterina Trofimova. "In our view, there is a good opportunity for Troika to benefit from future product, operational, managerial, and eventually financial support from Standard Bank."
Standard & Poor's aims to resolve the CreditWatch status upon completion of the acquisition, including regulatory approval, and after further discussions about Troika's strategy, the impact of the absorption of Standard Bank's Russian business, and managerial and financial support from and cooperation with the South African bank.
"If the transaction is successful, we could raise the Russia national scale rating on Troika by one notch," said Ms. Trofimova.
National scale ratings typically provide a finer demarcation of credit risk among local obligors than is possible with Standard & Poor's global scale, as the latter spans the full range of global credit quality and incorporates international comparative risk factors, including direct and indirect sovereign risk considerations.
The outlook is still negative on the global scale ratings, but if we raise the Russia national scale rating we might revise the outlook on the global scale ratings to stable, balancing the negative market pressure with enhanced capitalization and business benefits of Troika's cooperation with the strong partner. At the completion of the acquisition, we will mostly likely affirm the global scale ratings. We are unlikely to lift the long-term rating above the stand-alone credit profile of Troika, reflecting a low probability of extraordinary support from Standard Bank.
Understanding National Rating Scales, April 15, 2005
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