Moscow, Russia - November 21, 2006 - Sistema (LSE: SSA), the largest private sector consumer services company in Russia and the CIS, announced today that Standard & Poor's Ratings Services (S&P) raised its long-term debt rating to 'B+' from 'B' on the senior unsecured debt issued by Sistema Capital S.A. and OJSC Sistema Finance Investments, and on the senior secured debt issued by Sistema Finance S.A. All three companies are financing vehicles for Russian telecommunications and industrials holding group Sistema (JSFC) (BB-/Stable/--), which guarantees the debt.
According to S&P, the revision follows the review of the structural subordination of Sistema's debt with respect to that of its key operating subsidiary, Mobile TeleSystems (OJSC) (MTS). The one-notch upgrade reflects the improvement in recent quarters in the position of Sistema's creditors with respect to that of MTS' creditors.
"The better recovery prospects for Sistema's debt are supported by the company's progress in streamlining its corporate structure; continuing growth of its key subsidiaries with operations in fixed-line telecommunications, technology, financial services, and real estate; and increasing capitalization," said Standard & Poor's credit analyst Lorenzo Sliusarev. "Furthermore, Sistema's moderate parent-company debt bodes well for its creditors' position.Nevertheless, the remaining one-notch differential between Sistema's and MTS' debt ratings reflects our view that the prospective recovery of funds in a potential default by either company would likely be more favorable for MTS' creditors than for those of Sistema," added Mr. Sliusarev.
RATINGS LIST
To From
Sistema (JSFC)
Corporate credit rating BB-/Stable/-- BB-/Stable/--
Sistema Finance S.A. B+ B
Senior secured*
Sistema Capital S.A. B+ B
OJSC Sistema Finance Investments
Senior unsecured debt* B+ B
*Guaranteed by Sistema (JSFC)
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