Credit rating rationale. The issue represents senior unsecured debt of JSC "Rosgeologia" (hereinafter, the Issuer, or the Company). In accordance with the methodology, ACRA applied a detailed approach to estimate the recovery rate, which belongs to Category II. Therefore, the credit rating of the issue is equivalent to that of the Issuer, i.e. A(RU).

The credit rating of the Company is set at A(RU), which is two notches higher than the Company’s standalone creditworthiness assessment (SCA), which ACRA determined at bbb+. This is due to the low level of support of the Company from the state and the medium degree of dependence on similar risk factors (as per ACRA's methodology).

The Company's SCA is based on its strong business profile, which stems from the Company’s role as an executor of government contracts for the reproduction of the country’s mineral resource base, the increasing share of its participation in commercial projects, a stable market position due to good business diversification, both in terms of performance of various types of geological exploration activities and due to its presence in various Russian regions and foreign markets, as well as adequate corporate governance. The Company’s financial profile is characterized by moderate profitability, average leverage, and a good liquidity position. The rating is constrained by the small size of business, industry risks, and a negative free cash flow (FCF). In ACRA’s opinion, the credit risk in the geological exploration industry is above average because this industry is linked to the commodity cycle to a significant degree. This has a negative impact on the credit rating of the Company.

Key issue properties

Issuer

JSC "Rosgeologia"

Issuer’s credit rating

А(RU), outlook Negative

Actual issuer

JSC "Rosgeologia"

Type of security

Interest-bearing non-convertible non-certificated bond subject to centralized title registration, 01 series

Issue volume

RUB 6 bln

Reg. No.

4-01-09835-A

ISIN

RU000A103SV6

Offer date

September 30, 2021

Maturity date

September 26, 2024

Source: ACRA, issuer’s data

REGULATORY DISCLOSURE

The credit rating has been assigned under the national scale for the Russian Federation based on the Methodology for Assigning Credit Ratings to Individual Issues of Financial Instruments on the National Scale for the Russian Federation and the Key Concepts Used by the Analytical Credit Rating Agency within the Scope of Its Rating Activities.

A credit rating has been assigned to the (RU000A103SV6) bond issued by JSC "Rosgeologia" for the first time. The credit rating is expected to be revised within one year following the publication date of this press release.

The assigned credit rating is based on the data provided by JSC "Rosgeologia", information from publicly available sources, and ACRA’s own databases. The credit rating is solicited, and JSC "Rosgeologia" participated in its assignment.

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

ACRA provided no additional services to JSC "Rosgeologia". No conflicts of interest were discovered in the course of credit rating assignment.

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