LONDON (Standard & Poor's) Sept. 18, 2007--Standard & Poor’s Ratings Services said today it assigned its ‘BB’ long-term corporate credit rating to Renova Holding Ltd. (Renova), a holding company with most of its assets in Russia. The outlook is stable. At the same time, Standard & Poor's assigned Renova a Russia national scale rating of ‘ruAA’.
"The rating is constrained by Renova's concentration on a few large Russian assets, low share of liquid assets, and exposure to its majority shareholder," said Standard & Poor's credit analyst Elena Anankina. "The ratings are, however, supported by the group's successful growth and profitability in recent years, on the back of Russia's economic development, and substantial progress in improving portfolio diversification and liquidity."
Standard & Poor's expects that Renova will stick to its policy of keeping net debt below 25% of portfolio value and interest coverage by incoming dividends at 3x-5x.
Rating upside will largely depend on the extent of the expected gradual increase in Renova's portfolio diversity and liquidity and the general development of the Russian economy, where the company’s investment focus is expected to stay. The ratings would come under pressure in the event of financial policy slippages, or if Renova's portfolio incurs substantial losses. Our base-case scenario does not involve the sale of the group’s core holdings and subsequent reinvestment of proceeds.
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