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Fitch Affirms IC Russ-Invest at 'B'; Outlook Stable

January 24, 2011 | Fitch Ratings

Fitch Ratings-London/Moscow-24 January 2011: Fitch Ratings has affirmed Russian-based OJSC Investment Company IC RUSS-INVEST's (IC RUSS-INVEST) Long-term Issuer Default Rating (IDR) at 'B', National Long-term rating at 'BBB-(rus)' and Short-term IDR at 'B'. The Outlooks for the Long-term IDR and National Long-term rating are Stable.

The ratings reflect the high revenue volatility, which is driven by significant exposure to Russian market risk, and the potential corporate governance concerns surrounding a relatively small company owned by management. The ratings also reflect the absence of any debt or other material external finance at IC RUSS-INVEST. Fitch has been informed by the company that it has no plans to raise any debt, at least in the medium term.

Fitch notes that the bulk of the company's revenue is generated from proprietary trading in Russian equities and bonds on RTS and MICEX, leading to high exposure to Russian market risk. Management is attempting to diversify the company's business by launching a European trading platform and developing a brokerage business. However, the share of income from these activities as part of the company's total income is low.

IC RUSS-INVEST's balance sheet was almost 84% equity financed at end-Q310 under Russian Accounting Standards. The company's equity base provides a significant liquidity cushion for its few creditors and 94% of non-equity funding was covered by cash at end-Q310. Liabilities largely consist of dividends payable, which are due to inactive shareholders, and derivative trading liabilities.

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.


Company: IC RUSS-INVEST

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

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