Page 79 - RusRPTJuly18

company O1 Properties to 'B-' from 'B' and kept the rating on CreditWatch with negative implications . "We believe that the likelihood of a change of control in O1 Properties is increasing following its parent company O1 Group's default on some of its debt and the exit of Goldman Sachs International from O1 Properties' share capital," S&P commented. There is a change-of-control clause in O1 Properties' $350mn Eurobond maturing in 2021, as well as in most of the company's secured loan covenants, the agency reminds. Thus a change of ownership might lead its creditors to call for immediate repayment of most of company's debt, the agency warns, noting that this lead to keeping the ratings on CreditWatch negative. This "reflects the possibility that we could further downgrade O1 Properties if a change of control in O1 Properties took place, and if debt holders chose to exercise their right for immediate debt repayment," S&P writes, while noting that it is also currently unclear if the previous possible takeover by Laysa Group or other reported buyers will occur. But Mints businesses are suffering from banking assets contagion, and he risks losing over RUB20bn in assets after the Central Bank of Russia took control of banks in which he is a shareholder, Promsvyazbank (PSB) and Financial Corporation Otkritie last autumn. His non-state pension fund (NPF) Budushee, the third largest in the country, held 10% and 4.1%, respectively in the two banks. The NPF is now reportedly up for sale , while previously the problems with banking assets forced Mints to sell his real estate investment company O1 Properties , which held the largest portfolio of Class A office space in Moscow. This was flagged as bringing uncertainty to O1 bondholders and initially led S&P to place the developer on CreditWatch Negative .
In April, foreign investors sold federal loan bonds (OFZ). Their portfolio declined by RUB131bn to RUB2.2 trillion, according to the Central Bank. The share of non-residents in the OFZ market declined from a record 34.5% to 32.3%. The OFZ market for the month of May increased by 0.9% to RUB6.88 trillion.
Russia's ailed Promsvayzbank (PSB) made a buyout offer for $184mn worth of Eurobonds maturing in 2019 with 3% discount to nominal value, PSV Finance said in a report to the Irish Stock Exchange on June 15. PSB representatives told Vedomosti daily that such buyouts were standard practice in the bank's liquidity management. The bank was rescued in 2017 and is under temporary administration of the Central Bank of Russia (CBR). It is slated to receive over RUB240bn ($4bn) in capital injections . The Finance Ministry plans to turn the PSB into a state-controlled "defence bank" exclusively servicing the military and industrial complex and shielding the rest of the banking sector from possible Western sanctions. Previously the Finance Minister Anton Siluanov estimated that PSB could get RUB1 trillion worth of loans from the military-industrial complex. The ministry insists that banks transferring these credits would have to also transfer the capital backing it up, which is being contested by two largest banks Sberbank and VTB that already account for many of the deals. The head of CBR Elvira Nabiullina previously told Vedomosti d aily that such loans will be transferred to PSB together with reserves backing them.
Standard & Poor's Global lowered its long-term issuer credit rating on Russian real estate investment company O1 Properties to 'B-' from 'B' and
RUSSIA Country Report July 2018 www.intellinews.com