April 06, 2011 |
|PARIS (Standard & Poor's) April 5, 2011--Standard & Poor's Ratings Services said today that it has revised its outlook to stable from negative on Russia-based brokerage and investment banking house Renaissance Financial Holdings Ltd. and affirmed its 'B+' long-term and 'B' short-term counterparty credit ratings.|
"The 'B+' long-term rating reflects the risky operating environment for investment banking in Russia, RFHL's weak profitability, and its status as a nonoperating holding company," said Standard & Poor's credit analyst Scott Bugie.
These credit weaknesses partly offset the group's strong franchise in emerging-market equity research and investment banking as well as its adequate liquidity and capital in light of its risk profile.
RFHL, registered in Bermuda, is the 100% owner of several companies that form the Renaissance Capital investment banking group (RenCap). RFHL in turn is jointly owned by Renaissance Capital Holdings Ltd. (RCHL) and Onexim Holdings Ltd. (not rated), a Russian investment company. RCHL is part of Renaissance Group, which also owns companies in wealth and asset management, consumer finance (Commercial Bank Renaissance Capital) and merchant banking.
RFHL is a nonoperating holding company (NOHC) whose only source of cash is dividends from operating subsidiaries. According to our criteria, we typically view the creditworthiness of an NOHC as marginally weaker than that of its operating companies. We rate RFHL one notch below the "notional" stand-alone credit profile of 'bb-' for the consolidated RenCap group.
The 'B' long-term rating on RCHL also reflects its status as an NOHC and its 50% plus one half of one share ownership of RFHL. The change in the short-term rating on RCHL to 'C' from 'B' reflects a realignment of the short-term rating with the 'B' long-term rating of RCHL and RCHL's status as a NOHC.
"The stable outlook reflects our expectations that RenCap will generate moderately positive pretax income in 2011 based on better performance and trading volumes in Russian equities, sustained deal flow in underwriting and mergers and acquisitions in Russia, and the growing contribution from the brokerage business in Africa and the Commonwealth of Independent States," Mr. Bugie said.
Developments that could lead to an upgrade include an improvement in the Russian operating environment, a material increase in capital via shareholder investments or retained earnings, and a significant repayment of intragroup loans. Developments that could lead to a downgrade are deterioration in the Russian operating environment, a significant liquidating dividend paid to shareholders, and an increase in intragroup loans.
Company: Renaissance Capital
|Full company name||Renaissance Capital|
|Country of risk||Russia|
|Country of registration||Russia|