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Fitch Affirms IC Russ-Invest at ‘B’; Outlook Stable

April 29, 2009 | "Fitch Ratings"

Fitch Ratings-London/Moscow-28 April 2009: Fitch Ratings has today affirmed Russian-based OJSC Investment Company IC RUSS-INVEST's (IC RUSS-INVEST) ratings at Long-term Issuer Default (IDR) 'B', National Long-term 'BBB-(BBB minus)(rus)' and Short-term IDR 'B'. The Outlooks for the Long-term IDR and National Long-term rating are Stable.

The ratings reflect IC RUSS-INVEST's high exposure to Russian market risk, resulting in potential earnings volatility, and potential corporate governance concerns that surround a small company owned by management. The ratings also reflect the absence of any debt or material other (for example, bank or repo) external finance at IC RUSS-INVEST. The company has confirmed to Fitch that this is likely to continue at least for the medium-term.

Fitch notes that IC RUSS-INVEST's balance sheet was almost 83% equity-financed at end-2008 under Russian Accounting Standards. This means that the company's equity base provides a significant cushion for its few creditors. Fitch notes that the company generates almost all of its revenues from the trading of RUB-denominated equities and bonds. Consequently, its exposure to market risk is exceptionally high and its earnings are volatile.

Downward rating pressure could result from material changes in leverage or capital management. Upside rating potential is limited in the weak market environment, given IC RUSS-INVEST’s size and its reliance on proprietary trading, with its focus being the Russian market.

IC RUSS-INVEST is a former voucher fund with a shareholder base of more than 2.2 million individuals, although management owns a controlling stake. The company's main activity is trading on its own account. It invests in RUB-denominated securities that are mostly traded on either RTS or MICEX.

Rating actions are as follows:

Long-term foreign currency IDR affirmed at ‘B’ Outlook Stable
Short-term foreign currency IDR affirmed at ‘B’
National Long-term Rating affirmed at ‘BBB-(BBB minus)(rus)’; Outlook Stable


Full company namePublic Joint Stock Company "IINVESTMENT COMPANY IC RUSS-INVEST"
Country of riskRussia
Country of registrationRussia
IndustryFinancial institutions


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