NOTE: On April 19, 2022, the press release was corrected as follows: The Principal Methodology section was changed to: “The methodologies used in these ratings were Investment Holding Companies and Conglomerates published in July 2018 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1125855, and Government-Related Issuers Methodology published in February 2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1186207. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of these methodologies.” Revised release follows.
London, 03 March 2022 -- Moody's Investors Service ("Moody's") has today
placed on review for downgrade the Ba1 corporate family rating (CFR),
Ba1-PD probability of default and b1 Baseline Credit Assessment
of Svyazinvestneftekhim JSC (SINEK), a 100% state-owned
investment holding company of the Republic of Tatarstan (Tatarstan).
Today's rating action follows the placement on review of the sub-sovereign
rating of Tatarstan which took place on 1 March 2022. For additional
information, please refer to the related announcement: https://www.moodys.com/research/--PR_463223.
This rating action on Tatarstan reflects the potential weakening of Russia's
credit profile as captured by the placement on review for downgrade of
the sovereign government bond rating (Baa3) on 25 February 2022,
which was triggered by Russia's further military operation in Ukraine.
Details of the Russia sovereign rating action can be found here:
A full list of affected ratings can be found at the end of this press
RATINGS RATIONALE / FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE
OF THE RATINGS
Today's rating action on SINEK is a direct consequence of the sub-sovereign
rating action and reflects Moody's view that a potential downgrade of
Tatarstan's sub-sovereign rating would lead to a downgrade
of SINEK because of the company's strong interlinkages with the
sub-sovereign and sovereign rating. Oil producer Tatneft
PJSC (Baa2 on review for downgrade) provides 30%-50%
of the republic's total tax revenue and accounts for more than 60%
of SINEK's asset portfolio and the bulk of its dividend stream.
The decision to place sub-sovereign rating on review for downgrade
reflects the potential deterioration of its credit profile due to economic,
financial and institutional linkages with the federal government.
Moody's will assess to which extent the conflict and related sanctions
will negatively impact Tatarstan through lower corporate and personal
income taxes and heightened spending pressure. The region's
economic activity is concentrated in particular sectors, such as
oil and gas and petrochemicals, that could be directly affected
by sanctions. Restrictions to import and export activities could
also undermine key local taxpayers' ability to generate revenue
and pay taxes, directly affecting Tatarstan's tax collection.
In addition, the recently announced and potentially further sanctions
on high-technology imports would impair medium-to long-term
growth and diversification potential of local economies of many regions.
Furthermore, turbulence on local financial markets would lead to
higher borrowing costs for regional local governments and undermine access
to market funding. Finally, a weaker credit quality for the
sovereign would potentially diminish its ability to provide on-going
support to the local public sector via transfers and cheap funding through
The review for downgrade, in particular, will take into account
(1) Tatarstan's sub-sovereign rating following the conclusion
of the sovereign and sub-sovereign reviews; (2) the company's
individual credit factors, including the spillover effect of sanctions
imposed on Russian and Tatarstan corporates and the country's financial
system on SINEK's credit quality; and (3) the willingness and
ability of the Tatarstan government to extend support to SINEK in the
event of financial distress.
LIST OF AFFECTED RATINGS
On Review for Possible Downgrade:
..Issuer: Svyazinvestneftekhim JSC
....Corporate Family Rating, Placed
on Review for Downgrade, currently Ba1
....Probability of Default Rating, Placed
on Review for Downgrade, currently Ba1-PD
....Baseline Credit Assessment, Placed
Under Review for Downgrade, currently b1
..Issuer: Svyazinvestneftekhim JSC
....Outlook, Changed To Rating Under
Review From Stable
The methodologies used in these ratings were Investment Holding Companies and Conglomerates published in July 2018 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1125855 and Government-Related Issuers Methodology published in February 2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1186207. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of these methodologies.
Svyazinvestneftekhim JSC (SINEK) is a 100% state-owned investment
holding company of the Republic of Tatarstan. SINEK (1) manages
an investment portfolio of key companies in which the Tatarstan government
has either a controlling or a blocking stake (along with a golden share),
(2) consolidates the companies' dividends, and (3) invests mainly
in social and infrastructural projects in Tatarstan. The company
does not publish its financial statements.
For further specification of Moody's key rating assumptions and
sensitivity analysis, see the sections Methodology Assumptions and
Sensitivity to Assumptions in the disclosure form. Moody's
Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.
For ratings issued on a program, series, category/class of
debt or security this announcement provides certain regulatory disclosures
in relation to each rating of a subsequently issued bond or note of the
same series, category/class of debt, security or pursuant
to a program for which the ratings are derived exclusively from existing
ratings in accordance with Moody's rating practices. For ratings
issued on a support provider, this announcement provides certain
regulatory disclosures in relation to the credit rating action on the
support provider and in relation to each particular credit rating action
for securities that derive their credit ratings from the support provider's
credit rating. For provisional ratings, this announcement
provides certain regulatory disclosures in relation to the provisional
rating assigned, and in relation to a definitive rating that may
be assigned subsequent to the final issuance of the debt, in each
case where the transaction structure and terms have not changed prior
to the assignment of the definitive rating in a manner that would have
affected the rating. For further information please see the ratings
tab on the issuer/entity page for the respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this credit rating action,
and whose ratings may change as a result of this credit rating action,
the associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
The ratings have been disclosed to the rated entity or its designated
agent(s) and issued with no amendment resulting from that disclosure.
These ratings are solicited. Please refer to Moody's Policy
for Designating and Assigning Unsolicited Credit Ratings available on
its website www.moodys.com.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
Moody's general principles for assessing environmental, social
and governance (ESG) risks in our credit analysis can be found at http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1288235.
The Global Scale Credit Rating on this Credit Rating Announcement was
issued by one of Moody's affiliates outside the EU and is endorsed
by Moody's Deutschland GmbH, An der Welle 5, Frankfurt
am Main 60322, Germany, in accordance with Art.4 paragraph
3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies.
Further information on the EU endorsement status and on the Moody's
office that issued the credit rating is available on www.moodys.com.
The person who approved these credit ratings is Rehan Akbar.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
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