September 18, 2014 / 1:32 PM / 3 years ago

Fitch Puts Sistema, MTS, Bashneft & MTS Bank on Rating Watch Negative

(The following statement was released by the rating agency) MOSCOW/LONDON, September 18 (Fitch) Fitch Ratings has put the ratings of Sistema Joint Stock Financial Corporation (Sistema) and its subsidiaries OJSC Mobile TeleSystems (MTS), Joint Stock Oil Company Bashneft (Bashneft), and OJSC MTS Bank (MTS Bank) on Rating Watch Negative (RWN). The rating actions follow charges being levied against Vladimir Evtushenkov, the majority shareholder and Chairman of the Board of Directors of Sistema, in connection with the legalisation of shares of BashTEK group. KEY RATING DRIVERS Fitch believes the consequences may be negative for all the affected companies, but the likelihood of negative developments and the exact impact cannot be estimated at this stage. Sistema made a public announcement that its major shareholder and Chairman of its Board of Directors was charged with legalisation of shares of BashTEK group. Sistema's management believes that the acquisition of BashTEK group was legal and transparent. RATING SENSITIVITIES Fitch will resolve the RWN once there is greater clarity on the developments following the charges against Mr. Evtushenkov. The ratings could be affirmed or downgraded. FULL LIST OF RATING ACTIONS Sistema Long-Term Issuer Default Rating (IDR) of 'BB-': placed on RWN Local currency IDR of 'BB-': placed on RWN National Long-Term Rating of 'A+(rus)': placed on RWN Senior unsecured ratings of 'BB-' and 'A+(rus): placed on RWN Loan Participation Notes issued by Sistema International Funding S.A. and guaranteed by Sistema of 'BB-': placed on RWN MTS Long-Term IDR of 'BB+': placed on RWN Short-Term IDR of 'B': placed on RWN Local currency IDR of 'BB+': placed on RWN Local currency Short-Term IDR of 'B': placed on RWN National Long-Term Rating of 'AA(rus): placed on RWN Senior unsecured ratings of 'BB+' and 'AA(rus): placed on RWN Loan Participation Notes Issued by MTS International Funding Ltd and recourse to MTS of 'BB+': placed on RWN Bashneft Long-Term IDR of 'BB': placed on RWN Short-Term IDR of 'B': placed on RWN Local currency Long-Term IDR of 'BB': placed on RWN Local currency Short-Term IDR of 'B': placed on RWN National Long-Term Rating of 'AA-(rus)' : placed on RWN Senior unsecured ratings of 'BB' and 'AA-(rus)' : placed on RWN MTS Bank Long-term IDR of 'B+': placed on RWN Short-term IDR of 'B': not affected National Long-term Rating of 'A-(rus)': placed on RWN Viability Rating of 'b-': not affected Support Rating of '4': placed on RWN Contact: Sistema Principal Analyst Slava Bunkov Associate Director +7 495 956 9931 Supervisory Analyst Nikolai Lukashevich, CFA Senior Director +7 495 956 9968 Fitch Ratings CIS Ltd 26 Valovaya Street Moscow 115054 Committee Chair Damien Chew Senior Director +44 20 3530 1424 MTS: Principal Analyst Slava Bunkov Associate Director +7 495 956 9931 Supervisory Analyst Nikolai Lukashevich, CFA Senior Director +7 495 956 9968 Fitch Ratings CIS Ltd 26 Valovaya Street Moscow 115054 Committee Chair Damien Chew Senior Director +44 20 3530 1424 Bashneft: Principal Analyst Dmitry Marinchenko Associate Director +44 20 3530 1056 Supervisory Analyst Maxim Edelson Senior Director +7 495 956 9901 Fitch Ratings Moscow Valovaya Street, 26 Moscow Committee Chair Damien Chew Senior Director +44 20 3530 1424 MTS Bank Primary Analyst Sergey Popov Associate Director +7 495 956 9981 Fitch Ratings CIS Ltd 26 Valovaya Street Moscow 115054 Secondary Analyst Konstantin Yakimovich Associate Director +7 495 956 9978 Committee Chair 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. For regulatory purposes in various jurisdictions, the supervisory analyst named above is deemed to be the primary analyst for this issuer; the principal analyst is deemed to be the secondary. Applicable criteria, 'Corporate Rating Methodology', dated 28 May 2014 and 'Global Financial Institutions Rating Criteria', dated 31 January 2014, are available at www.fitchratings.com. Applicable Criteria and Related Research: Global Financial Institutions Rating Criteria here Corporate Rating Methodology - Including Short-Term Ratings and Parent and Subsidiary Linkage here Additional Disclosure Solicitation Status 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 WEBSITE '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. 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.

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