Standard & Poor’s reaffirms LenSpetsSMU rating

15.06.2010

On 11 June, the rating agency Standard & Poor’s published its regular report reaffirming CJSC SSMO LenSpetsSMU’s rating as ‘B’ level according to the international scale and ‘ruA’ level according to the national scale, outlook – ‘Stable’.

The main factors influencing the company’s rating, according to Standard & Poor’s, continue to be mainly macroeconomic, including: some cyclical downturn in real estate demand, weak though recovering real estate demand in Russia, as well as insufficient transparency and unpredictable nature of the administrative environment. LenSpetsSMU’s dependence on the St. Petersburg regional market, where the company operates as a developer, was also considered as a negative factor.

The following factors were deemed as positive: LenSpetsSMU’s leading position in the real estate market in St. Petersburg and its region, the vast experience in the implementation of construction projects, effective management over administrative and legal risks, as well as the company’s brand recognition.

Standard & Poor’s analysts say that the availability of a liquid position for an amount of approximately 1.5 bn rubles (as of 31.05.2010), proactive financial management and traditionally good access to public capital markets allow the balancing of relatively high financial leverage, according to S&P.

S&P’s report notes that LenSpetsSMU, like many other companies in the construction business, had a considerable debt load at the beginning of the crisis. However, the company managed to fulfill all their obligations to creditors and to decrease their debt load during 2009. The following placements of ruble bonds on the domestic public debt market allowed the company to decrease the share of dollar borrowings in the credit portfolio to 30%.

At the same time, a ‘B’ rating according to the international scale and ‘4’ rating of the expected level of debt redemption for CJSC SSMO LenSpetsSMU bonds of 01 series, БО-02 series and credit linked notes (CLN) were also reaffirmed.

The confirmation of the rating is a positive signal to investors who once again received proof that LenSpetsSMU’s stock bonds of БО-02 series placed on 27.05.2010 satisfy all the requirements for inclusion into the Lombard List of the Central Bank of the Russian Federation.

A complete version of Standard & Poor’s report is available on LenSpetsSMU’s financial web-site.

REFERENCE:

The current rating of CJSC SSMO LenSpetsSMU: B / Stable / B; ruA.

LenSpetsSMU is the first and only Russian construction company to receive and publish credit ratings from the largest and most conservative international rating agency - Standard & Poor's. At the same time, LenSpetsSMU is currently the most highly-rated construction company in Russia and Eastern Europe.

The `B' international scale rating means that the company has the capacity to meet its financial commitments on obligations in full and in due time.

The ‘ruA’ national scale rating shows that the company is characterized by a moderately strong capacity to meet its financial commitments on obligations in full and in due time, compared to other Russian issuers.

CORPORATE CREDIT RATINGS HISTORY

22.12.2006

The rating as per international scale – ‘B’, outlook – stable, the rating as per national scale – ‘ruA-’ were assigned.

The rating for ruble-denominated bonds of CDR (01 and 02 series), where CJSC SSMO LenSpetsSMU acted as a guarantor, as per national scale ‘ruA-’ was also assigned.

21.03.2007

The ratings as per international scale (‘B’, outlook – stable) and national scale (‘ruA-’) were affirmed.

17.04.2007

The rating for obligations (CLN) as per international scale ‘B’ was assigned.

12.12.2007

The outlook as per international scale was revised from «stable» to «positive».

The rating as per national scale was increased from ‘ruA-’ up to ‘ruA’.

The rating of ruble bonds of 01 and 02 series was also increased from ‘ruA-’ up to ‘ruA’.

04.04.2008

The ratings as per international and national scales were affirmed.

07.10.2008

The outlook as per international scale was revised from «positive» to «stable» because of financial crisis and overall deterioration of the economy.

The rating as per national scale was left without alternations.

30.01.2009

In spite of the process of changing the credit-linked note (CLN) parameters, the ratings as per international and national scales were affirmed.

26.03.2009

The ratings as per international and national scales were affirmed.

01.09.2009

Following the fulfillment of the major part of debt obligations being subject to redemption in 2009, the international and national scale ratings were affirmed.

11.12.2009

The ratings as per international and national scales were affirmed.

24.05.2010

Rating for obligations (stock-exchange bond issue of БО-02 series) as per international scale ‘B’ assigned.

11.06.2010

The ratings as per international and national scales were affirmed.

CONTACT DETAILS:

Natalia Menzel, Head of Public Relations

tel. (812) 348-21-25, e-mail: menzel_n@lenspecsmu.ru

Viktor Vasenev, Deputy CFO

tel. (812) 348-09-95, e-mail: vasenev_v@lenspecsmu.ru