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Correction: Fitch Rates New Europlan Opco 'BB-', Withdraws Ratings on Holdco
July 7, 2017 / 9:23 AM / 18 days ago

Correction: Fitch Rates New Europlan Opco 'BB-', Withdraws Ratings on Holdco

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(The following statement was released by the rating agency) LONDON, July 07 (Fitch) This commentary replaces the version published on 30 June 2017. It corrects the rating action on the senior unsecured rating of JSC Leasing company Europlan's bonds to affirmation at 'BB-' following the transfer of the notes from PJSC Europlan, and not withdrawn at PJSC Europlan and assigned at opco as stated initially. Fitch Ratings has withdrawn PJSC Europlan's ratings, including its Long-Term Issuer Default Ratings (IDRs) of 'BB-'. Simultaneously, the agency has assigned the newly created JSC Leasing company Europlan (LC Europlan) Long-Term IDRs of 'BB-' with a Stable Outlook. The rating actions follow the completion of the reorganisation of PJSC Europlan. The reorganisation involved the transfer from PJSC Europlan to its new subsidiary LC Europlan of all financial liabilities relating to its leasing business (including outstanding bonds and bank loans) and all of its leasing assets, but only a portion of its cash and liquid assets. Fitch has withdrawn PJSC Europlan's ratings as it has undergone a reorganisation. Accordingly, Fitch will no longer provide ratings or analytical coverage for PJSC Europlan. A full list of rating actions is at the end of this rating action commentary. KEY RATING DRIVERS The asset/liability transfer is the second stage of Europlan's reorganisation, the ultimate purpose of which is to create a holding company for the non-bank financial assets of Safmar Group, which apart from Europlan include a 49% stake in VSK Insurance (BB-/Stable), and a 100% stake in Safmar pension fund. The first stage of the reorganisation was completed in December 2016, when Safmar contributed its stakes in the pension fund and insurance company to PJSC Europlan, which additionally raised RUB15 billion of equity contributed in cash via a secondary public offering. The rating actions reflect Fitch's view that LC Europlan's credit profile does not significantly differ from that of PJSC Europlan before it received stakes in the pension fund and VSK. LC Europlan's management has informed us that there are no plans to change the strategy of the company after the carve-out. The company will continue to focus on retail financial leasing of vehicles. LC Europlan will retain its core management team and existing branding. LC Europlan's 'BB-' Long-Term IDRs and senior debt rating reflect the company's significant franchise in the Russian auto leasing sector, so far conservative management and risk appetite, and sound financial metrics. At the same time, the ratings also reflect the high-risk Russian operating environment and contagion risks resulting from Europlan's shareholder, Safmar Group (previously known as B&N Group). As per preliminary management accounts after the reorganisation, LC Europlan's leverage (defined as debt/equity) has increased to 3.3x compared with 1.5x at PJSC Europlan prior to reorganisation, as a result of PJSC Europlan retaining a sizable part of its cash and liquid assets. However, Fitch views this leverage as consistent with a 'BB-' rating. The senior unsecured notes issued by PJSC Europlan were transferred to LC Europlan's as part of the group reorganisation and have been affirmed at 'BB-'. LC Europlan's senior debt rating is aligned with the company's Local-Currency IDR, reflecting Fitch's view of average recovery prospects for unsecured senior creditors in case of default. This in turn is driven by the moderate proportion of company assets that have been pledged to secured creditors. RATING SENSITIVITIES An upgrade of LC Europlan's IDRs is currently unlikely given the still challenging operating environment and expected further increase in leverage from renewed business growth. The company could be downgraded if its asset quality and performance weaken significantly, to the extent that this results in a marked increase in the company's leverage or compromises the quality of its capital. LC Europlan could be also downgraded if Fitch concludes that its strategy, risk appetite, balance sheet structure and/or financial metrics are likely to significantly weaken following shareholder actions, or if the company become significantly exposed to related parties, non-core assets or other contingent risks arising from the other assets of its owner. The senior debt rating could be downgraded in case of downgrade of the company's Local-Currency IDR, or a marked increase in the proportion of pledged assets, potentially resulting in lower recoveries for unsecured senior creditors in a default scenario. The rating actions are as follows: PJSC Europlan Long-Term Foreign- and Local-Currency IDRs: 'BB-'; withdrawn Short-Term Foreign-Currency IDR: 'B'; withdrawn JSC Leasing company Europlan Long-Term Foreign- and Local-Currency IDRs: assigned at 'BB-'; Outlooks Stable Short-Term Foreign-Currency IDR: assigned at 'B' Senior unsecured debt: affirmed at 'BB-' (transferred from PJSC Europlan) Contacts: Primary Analyst Aslan Tavitov Director +44 20 3530 1788 Fitch Ratings Limited 30 North Colonnade London E14 5GN Secondary Analyst Ruslan Bulatov Associate Director +7 495 956 9982 Committee Chairperson James Watson Managing Director +7 495 956 6657 Media Relations: Julia Belskaya von Tell, Moscow, Tel: +7 495 956 9908, Email: julia.belskayavontell@fitchratings.com; Peter Fitzpatrick, London, Tel: +44 20 3530 1103, Email: peter.fitzpatrick@fitchratings.com. Additional information is available on www.fitchratings.com Applicable Criteria Global Non-Bank Financial Institutions Rating Criteria (pub. 10 Mar 2017) here Additional Disclosures Dodd-Frank Rating Information Disclosure Form here Solicitation Status here#solicitation Endorsement Policy here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. DIRECTORS AND SHAREHOLDERS RELEVANT INTERESTS ARE AVAILABLE here. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. Copyright © 2017 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. In issuing and maintaining its ratings and in making other reports (including forecast information), Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The manner of Fitch’s factual investigation and the scope of the third-party verification it obtains will vary depending on the nature of the rated security and its issuer, the requirements and practices in the jurisdiction in which the rated security is offered and sold and/or the issuer is located, the availability and nature of relevant public information, access to the management of the issuer and its advisers, the availability of pre-existing third-party verifications such as audit reports, agreed-upon procedures letters, appraisals, actuarial reports, engineering reports, legal opinions and other reports provided by third parties, the availability of independent and competent third- party verification sources with respect to the particular security or in the particular jurisdiction of the issuer, and a variety of other factors. Users of Fitch’s ratings and reports should understand that neither an enhanced factual investigation nor any third-party verification can ensure that all of the information Fitch relies on in connection with a rating or a report will be accurate and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings and its reports, Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings and forecasts of financial and other information are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification of current facts, ratings and forecasts can be affected by future events or conditions that were not anticipated at the time a rating or forecast was issued or affirmed. The information in this report is provided “as is” without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. 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