Press Releases / 30.10.2014

Press Release as of 30.10.2014


FinEx Tradable Russian Bonds UCITS ETF ($)

CJSC AK&M Rating Agency assigned an 'A+' national scale credit rating to the exchange-traded investment fund FinEx Tradable Russian Bonds UCITS ETF (share class in US dollar terms, ISIN IE00B84D7P43). The outlook is stable.

 

The 'A+' rating indicates that the investment fund qualifies as a highly reliably and creditworthy financial vehicle. The risk of a failure to meet obligations to investors in time is insignificant.

The Fund was established by FinEx Funds Plc., an umbrella investment fund with the segregated responsibility of subfunds established in Ireland in 2009 and allowed to operate subject to EU Directive 352 'Undertakings for Collective Investment in Transferable Securities' (UCITS) issued in 2011.

The Fund's investment objective is to ensure the net asset value growth in line with the Barclays EM Tradable Russian Corporate Bond Index representing major Russian issuers' Eurobonds maturing in ca. 3 years.

As of the rating assignment date, the Underlying Asset (the physical asset represented by the base index) contained 27 components (Eurobonds issued by Russian companies operating in the financial, fuel & energy, telecommunications, industrial and raw materials sectors. The Eurobonds are traded on the stock exchanges of Ireland, Luxembourg and the Netherlands. As of the rating assignment date, none of the issuers accounted for more than 5.5% of the total investment portfolio (in value terms). As of October 24, 2014, ca. 252,000 securities of the Fund in the Russian ruble denominated share class and 471,000 securities in the US dollar denominated share class were in circulation; the total size of assets across the two share classes reached ca. RUB 2 billion. The Fund's securities are traded on the Moscow Exchange under the FXRB ticker (for the Russian ruble denominated share class) or the FXRU ticker (for the US dollar denominated class). The latter is also listed on the London stock exchange (LSE).

 

The key positive rating driver for FXRB(RU) is the relatively high credit quality of the debt securities forming the basis of the Underlying Asset, following the Barclays EM Tradable Russian Corporate Bond Index (EMRUS) profitability trend as close as possible with its 100 percent physical replication. The credit ratings of the Russian issuers' Eurobonds constituting the Fund's investment portfolio range from 'BBB-' to 'BB+' on the S&P international scale, with bonds of the PRIME category (investment grade) accounting for more than 70% of the Fund's portfolio. The index is rebalanced (recomposed) every six months.

In AK&M Rating Agency's view, the high institutional status of FinEx Funds Plc.'s partners and counterparties, namely, Bank of New York Mellon (the Fund's custodian / manager), PricewatershouseCoopers (the auditor), etc., also contributes to the credit rating.

Besides, the credit rating of FinEx Tradable Russian Bonds UCITS ETF is indirectly supported by its high investment appeal arising from the high expected return, the low minimum amount of investment and the small commission fee.

In AK&M Rating Agency view, the key factor constraining the rating is the possible credit quality deterioration of the Fund's securities portfolio in the wake of the U.S. and European sanctions against Russia (including sectoral sanctions).

 

The FinEx Tradable Russian Bonds UCITS ETF (exchange-traded investment funds) were launched in May 2014 by open-ended investment company FinEx Funds plc operating within the Irish jurisdiction and authorized by the Central bank of Ireland, located at: Block D, Iveagh Court, HarCoart Road, Dublin 2, Ireland. The Company's investment manager is Finex Capital Management LLP registered as a limited liability partnership in England and Wales (FCA registration number 550784) at: 4th Floor, 39 Dover Street, London W15 4NN, United Kingdom.

FinEx Funds plc's authorized representative in Russia is Management Company FinEx Plus LLC, a member of the National Association of Securities Market Participants (NAUFOR).

The Fund's securities are traded on the Moscow Exchange under the FXRB ticker (for the Russian ruble denominated share class) or the FXRU ticker (for the US dollar denominated class). The latter is also listed on the London stock exchange (LSE).

FinEx Funds plc's auditor is PricewaterhouseCoopers, One Spenser Dock, North Wall Quay, Dublin 1, Ireland.

 

This press release is based on the Statement of assignment of a credit rating to exchange-traded investment funds of FinEx Funds plc.

The rating, along with any information and conclusions provided in this press release, only conveys our opinion on the Company's creditworthiness and shall not be construed as a recommendation to purchase or sell securities, or to lend funds.

AK&M Rating Agency shall not be held liable for any interpretations, inferences and consequences related to the application of results of the rating estimation procedure by any third parties.

CJSC Analysis, Consulting and Marketing Rating Agency is a leading independent national rating agency engaged in rating activities since 1993. CJSC AK&M Rating Agency is accredited by the Ministry of Finance of the Russian Federation (order no. 452 as of September 17, 2010) and is on the Central Bank of Russia's Register of Accredited Rating Agencies.

 

CJSC AK&M Rating Agency

www.akmrating.ru

Ul. Gubkina 3, Moscow, Russia

Phone no. (495) 916-70-30, fax no.: (499) 132-69-18.

 

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