The credit rating of OOO Gorodskoy Supermarket (hereinafter, the Company, or Gorodskoy Supermarket) is based on the very strong assessment of support provided to the Company by Sanymon Corporation Limited (CYP) (hereinafter, the Holding Structure of the Azbuka Vkusa Chain, or the Supporting Entity; ACRA Rating A-(RU), outlook Stable), as well as the high level of dependence on homogeneous risk factors together with the Supporting Entity.

Gorodskoy Supermarket is the main operating company and asset holder of the Holding Structure of the Azbuka Vkusa Chain. Due to the degree of interrelation between the Company and the Supporting Entity, ACRA believes it is rational to use only the Methodology for Analyzing Rated Entities Associated with a State or a Group, without determining the Company’s standalone creditworthiness assessment (SCA).

The very high level of support stems from the very strong legal integration between the Company and the Holding Structure of the Azbuka Vkusa Chain, which holds a 100% share in the authorized capital of Gorodskoy Supermarket via other legal entities that are part of the holding. The Company’s strategy and key decisions regarding its development are made by the Holding Structure of the Azbuka Vkusa Chain. In addition, due to the fact that 100% of the operating and cash flow of retail trade passes through the Company, there are no restrictions on the provision of support. It should be noted that part of the Company’s fixed assets (30% according to ACRA’s calculations) belong to AV Invest CJSC and Firma Daim LLC, which in turn indirectly belong to the Holding Structure of the Azbuka Vkusa Chain. The Supporting Entity also acts as the guarantor of the Company’s BO-P01 series bond issue (ISIN RU000A100HE1, ACRA rating A-(RU)).

High assessment of the degree of dependence on homogeneous risk factors. As the Company is one of the main operating assets of the Holding Structure of the Azbuka Vkusa Chain, ACRA assesses the dependence of the Company and the Supporting Entity on homogeneous risk factors as high. However, taking into account the fact that the Company consolidates cash flows from operations, the Agency did not make a negative adjustment when determining the credit rating.

KEY ASSUMPTIONS

  • The Holding Structure of the Azbuka Vkusa Chain maintaining shareholder and operational control;
  • The Company maintaining its status as the primary operating company and main asset holder of the Holding Structure of the Azbuka Vkusa Chain.

potential outlook or rating change factors

The Stable outlook assumes that the rating will most likely stay unchanged within the 12 to 18-month horizon.

A positive rating action may be prompted by:

  • Upgrade of the credit rating of the Holding Structure of the Azbuka Vkusa Chain.

A negative rating action may be prompted by:

  • Loss of shareholder or operational control by the Holding Structure of the Azbuka Vkusa Chain;

  • Loss of the Company’s status as the main operating company of the Holding Structure of the Azbuka Vkusa Chain;

  • Downgrade of the credit rating of the Holding Structure of the Azbuka Vkusa Chain.

rating components

SCA: none.

Adjustments: none.

ISSUE RATINGS

Bonds of OOO Gorodskoy Supermarket (RU000A100HE1), maturity date: June 15, 2029, issue volume: RUB 3.5 bln — A-(RU).

Rationale. The issue is a senior unsecured debt obligation of OOO Gorodskoy Supermarket (hereinafter, the Issuer), which is wholly owned by Sanymon Corporation Limited (CYP). The credit rating of the issue has been affirmed based on the assignment of a credit rating to OOO Gorodskoy Supermarket. In accordance with the prospectus, in the case of default by the Issuer on its obligations, Sanymon Corporation Limited (CYP) (the guarantor) shall redeem the bonds (taking into account the accumulated coupon income). Due to the absence of either structural or contractual subordination of the issue, ACRA regards it as equal to other existing and future unsecured and unsubordinated debt obligations of the guarantor in terms of priority. According to ACRA’s methodology, the credit rating of the issue is on par with the credit rating of Sanymon Corporation Limited (CYP) —  A-(RU).

REGULATORY DISCLOSURE

The credit rating has been assigned under the national scale for the Russian Federation based on the Methodology for Analyzing Rated Entities Associated with a State or a Group and the Key Concepts Used by the Analytical Credit Rating Agency within the Scope of Its Rating Activities. The Methodology for Assigning Credit Ratings to Individual Issues of Financial Instruments on the National Scale for the Russian Federation was also applied to assign the credit rating to the above issue.

A credit rating has been assigned to OOO Gorodskoy Supermarket for the first time. The credit rating of the bond issue (RU000A100HE1) of OOO Gorodskoy Supermarket was published by ACRA for the first time on June 28, 2019. The credit rating of OOO Gorodskoy Supermarket and its outlook, as well as the credit rating of the bond issue (RU000A100HE1) of OOO Gorodskoy Supermarket are expected to be revised within one year following the publication date of this press release.

The credit ratings were assigned based on data provided by OOO Gorodskoy Supermarket, information from publicly available sources, and ACRA’s own databases. The credit ratings are solicited, and OOO Gorodskoy Supermarket participated in their assignment.

In assigning the credit ratings, ACRA used only information, the quality and reliability of which was, in ACRA’s opinion, appropriate and sufficient to apply the methodologies.

ACRA provided additional services to OOO Gorodskoy Supermarket. No conflicts of interest were discovered in the course of credit rating assignment.

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