Standard & Poor’s Ratings Services has assigned its ‘B’ senior unsecured debt rating to the proposed loan participation notes to be issued by Standard Bank London Holdings PLC (SBLH; not rated), but without recourse to SBLH, for the purpose of financing a loan to Russia-based OJSC Commercial Bank Petrocommerce (PK; B/Stable/C).
The credit risk of the loan participation notes wholly reflects the counterparty credit ratings on PK. The amount and the term of the issue are to be confirmed. Joint lead managers of the issue are ABN Amro and Standard Bank London.
The ratings on PK reflect the ownership of the bank by Lukoil OAO (BB/Stable/–), one of Russia’s largest oil companies in terms of crude reserves, production, and exports. The bank’s credit profile is also enhanced by its good capital base and adequate liquidity position. These positive factors are offset by the bank’s relatively weak earnings profile and large single-party concentrations (namely in the Lukoil group).
With consolidated total assets of US$1.4bn and reported equity of US$231mn at June 30, 2003, PK ranks among the 20 largest Russian banks. It operates as a settlement bank for Lukoil; a significant part of PK’s business comes from Lukoil and its affiliates.