Training on sovereign risk credit analysis, October 24

ACRA assigns A+(RU) to bond issued by Domodedovo Fuel Facilities Ltd.

Credit rating rationale. Bond issue is a senior unsecured debt obligation of Domodedovo Fuel Facilities Ltd. (hereinafter, the Issuer), which is an operational subsidiary of DME Limited (hereinafter, the Company, Group, or Domodedovo). The credit rating was assigned on the basis of public irrevocable offers from DME Limited as a holding company and from key operational companies of the holding company generating the bulk of the Group’s cash flow. The list of offerers is identical to the list of companies acting as sureties under Eurobonds issued by the Group, which, in ACRA’s opinion, is indicative of no structural subordination of the issues. Therefore, and in view of no contractual subordination, ACRA ranks the bond pari passu with other existing and future unsecured and unsubordinated obligations of the Company. At the same time, ACRA notes the lack of a suretyship from the owner of Domodedovo’s assets – Hacienda Limited (Cyprus) – with respect to both the rated bond issue and Eurobonds issued earlier. In view of the above, ACRA used a detailed approach to assess loss recovery rate. According to the ACRA methodology, the recovery rate for Domodedovo’s unsecured debt is classified into the second category, and therefore, the credit rating of the issue is on par with the credit rating of DME Limited, i.e. A+(RU).

The credit rating of DME Limited stems from low industry risks coupled with the leading market position of the Company, its strong business profile and strong liquidity as well as high profitability. The credit rating is under pressure from medium leverage and medium level of corporate governance.

Key issue properties

Borrower

DME Limited

Issuer credit rating

A+(RU), outlook Stable

Actual issuer

Domodedovo Fuel Facilities Ltd.

Type of security

Exchange-traded interest-bearing
certified bearer bonds

RegS

4B02-01-00356-R-001P

Issue volume

RUB 10 bln

Final placement date

December 26, 2017

Maturity date

December 20, 2022

Regulatory disclosure

The credit rating has been assigned under the national scale for the Russian Federation and is based on the Methodology for Assigning Credit Ratings to Individual Issues of Financial Instruments Under the National Scale of the Russian Federation, and the Key Concepts Used by the Analytical Credit Rating Agency within the Scope of Its Rating Activities.

A credit rating has been assigned to 4B02-01-00356-R-001P series bond issued by Domodedovo Fuel Facilities Ltd. for the first time. The credit rating is expected to be revised within one year following the rating action date (December 25, 2017).

The assigned credit rating is based on the data provided by DME Limited, information from publicly available sources, as well as ACRA’s own databases. The credit rating is solicited, and DME Limited participated in its assignment.

No material discrepancies between the provided data and the data officially disclosed by DME Limited in its financial statements have been discovered.

ACRA provided no additional services to DME Limited. No conflicts of interest were discovered in the course of credit rating assignment.

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