Page 73 - RusRPTOct19

8.6%, to 1.5mn eligible pensioners (up by 3.6%). Reports in 2018 indicated that both the government and the CBR are preparing to tap into the NPF private market for badly needed investment resources. The CBR has toughened the regulations for NPFs and allowed the sector to consolidate around several major state-affiliated financial groups for easier control. Most recently reports suggested that the Finance Ministry is drafting another stage of the pension system reform, in particular changing the mechanism of Individual Pension Capital (IPK). The ministry continues to reform the pension system, which has started in 2018 with an unpopular and long-unaddressed move of hiking the retirement age. In September 2018 the Finance Minister Anton Siluanov said that the new federal pension savings system – a funded pension system -- based on IPK could be launched as of 2020.
Russian agricultural holding RusAgro plans a secondary public offering (SPO) of $200mn-$300mn, in a deal that could be closed in the week of September 23, Vedomosti daily reported September 22 citing unnamed market sources. As of September 19 the capitalisation of RusAgro in London stood at $1.47bn. Russian Direct Investment Fund (RDIF) was reportedly considering buying into RusAgro as it prepares to boost agro cooperation and trade with China. Previous reports already suggested that RusAgro could be preparing an SPO, with the shareholders approving an issue of 6.5mn shares in March, accounting for 24% of current share capital. Reportedly the preparations for the SPO has been put on hold as RusAgro was acquiring oil holding Solnechnye Produkty, which involved buying out RUB34.7bn of debt of the company to sanctioned Russian Agricultural Bank (Rosselkhozbank).
X5 Retail Group shares have enjoyed the sector’s best performance YTD, climbing 46% vs. a 31% for the RTS. In addition to robust 1H19 revenue growth of 15% at a 7.7% EBITDA margin, the stock has benefited from improving sentiment toward ruble-based stories and offering exclusive exposure to a niche. Analysts forecasts anticipate a 2H19 top-line increase of 14% at a 7.3% EBITDA margin, with greater focus on scale over profitability. However, for FY20, sales will add only 10-12% y/y,. Last month, X5 Retail Group shares gained 13%, and now offer only a 10% upside to VTB’s 12-mo Target Price of $38. VTB downgrade the name from Buy to Hold.
8.4 International ratings
Russia - Rating agency
as of September 1, 2019
last change
Moodys (USD rating)
Baa3 (S)
02/08/19
Fitch (USD rating)
BBB (N)
09/08/19
S&P
BBB- (S)
23/02/18
Russia’s credit ratings have been improving and all three ratings agencies have returned Russia to “investment grade” status (BBB- or more by S&P and Fitch, Baa3 by Moody’s).
Moody’s rates Russia at Baa3 with stable outlook on both its foreign and local currency debt.
73 RUSSIA Country Report October 2019 ww.intellinews.com