Press Releases / 13.11.2015
Press Release as of 13.11.2015
OOO Raiffeisen Capital Asset Management Company
AK&M Rating Agency has downgraded the credit rating of MPC GC-2 from 'A' tier 3, to 'B++' tier 2. The outlook is stable.
The rating downgrade follows the early repayment by CJSC Rapid, one of the mortgage borrowers, of its debt liabilities, with the result that the mortgage coverage for MPC GC-2 is currently entirely accounted for by mortgage certificates under the loan agreement with just one borrower (CJSC Rusincom). The dependence on one borrower has negative affected the quality of the mortgage coverage and the yield on the financial instrument, which served as a ground for the rating downgrade.
At the same time, we note a deterioration in the creditworthiness of CJSC Rusincom as of the end of the 9-month period in 2019 months 2015 (net loss reaching RUB 379 million), as the probability of default on the long-term horizon increased to 47%.
Another point of concern is that CJSC Rapid had effected a mere one-quarter of all expected loan interest payments by the moment it repaid the debt obligations, which precented the owners of the MPC GC-2 mortgage participation certificates from earning ca. RUB 550 million in profits. With this in mind, AK&M Rating Agency has estimated the investors' maximum direct losses at approximately 40% of the mortgage coverage.
In AK&M Rating Agency's view, the positive rating drivers include satisfactory quality of the mortgage collateral provided on the loan to CJSC Rusincom, a high credit rating of B&N Bank (PJSC) (the loan originator and the settlement agent for transaction purposes), a high institutional status of the special depository (CJSC First Specialized Depository), a reputable registrar (CJSC Computershare Registrar) and the absence of overdue debt on the obligations constituting the mortgage coverage of MPC GC-2. Besides, we appreciate the moderately high reliability of insurance coverage applying to real estate assets provided by B&N Insurance LLC, an insurance company specializing in the mortgage insurance segment and accredited by AHML.
MC GeoCapital, Ltd.Co is a relatively small management company located in Moscow. It is licensed to manage investment funds, mutual funds and non-state pension funds (lic. no. 21-000-1-00662 as of September 17, 2009 issued by Russia's Federal Financial Markets Service). As of September 30, 2015, the company's equity capital totaled almost RUB 100 million, the amount of assets managed exceeding RUB 27 million.
AK&M Rating Agency assigned a credit rating to the MPC GC-2 mortgage participation certificates for the first time on February 13, 2015. All rating action announcements are available on the akmrating.ru website.
For estimation purposes, we completely rely on the reliability of information provided by MC GeoCapital, Ltd.Co. The rationale for AK&M Rating Agency's judgment on the rating may include information acquired from other sources we deem to be reliable; however, the agency does not check the input data exhaustively and disclaims all responsibility for their possible errors.
This press release is based on the monitoring results of the current credit rating assigned to the MPC GC-2 mortgage participation certificates and the Credit Rating Methodology for Mortgage Participation Certificates as of October 30, 2015.
The rating, along with any information and conclusions provided in this press release, only conveys our creditworthiness opinion 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.
AK&M 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.
AK&M Rating Agency
Ul. Gubkina 3, Moscow, Russia
Phone no. (495) 916-70-30, fax no.: (499) 132-69-18.