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S&P Rates Russian Veles Capital 'CCC/C', 'ruB-'; Otlk Stable

April 03, 2006 | Cbonds

Standard & Poor's Ratings Services said today it assigned its 'CCC' long-term and 'C' short-term counterparty credit ratings to Russia-based Investment Company Veles Capital LLC. At the same time, Standard & Poor's assigned its 'ruB-' Russia national scale rating to Veles. The outlook is stable.
"The ratings on Veles reflect its high exposure to the volatile and thinly traded Russian capital markets, poor revenue diversification, low capitalization, and weak financial flexibility," said Standard & Poor's credit analyst Eugene Tarzimanov. "These negative factors are partially mitigated, however, by the company's good franchise on the local veksel market, and the improving macroeconomic environment in Russia," he added.
Veles is a Russian securities firm with total capital of $8 million at Dec. 31, 2005. It ranks as one of the largest traders on the Russian veksel (promissory note) market, trading for its own account and providing brokerage services for a limited number of customers. Veles is part of a larger, untransparent group involved in private-equity-type deals and real estate in Russia and Ukraine.
Veles is fully management owned. Its stable management team, which has been with the company since 1995, is a positive factor in the credit profile.
The stable outlook balances Standard & Poor's expectations that Veles will be able to grow organically in line with its strategic objectives while diversifying its revenues and activities with the inherent risks linked to the strategy of developing new business lines.
"Veles has the potential for improved creditworthiness if it succeeds in building up a stronger and more diversified profit base, and demonstrates an ability to generate sustainable profits from a wider customer base," said Standard & Poor's credit analyst Ekaterina Trofimova. "An upgrade might also follow a material capital increase, which, to some extent, could protect the company in a volatile market environment or in a low-trading-volume scenario. The prospective development of the ratings will also depend on the evolution of the Russian capital markets, which will remain concentrated and highly unpredictable in the medium term," she added.

Company: Veles Capital

Full company nameVeles Capital
Country of riskRussia
Country of registrationRussia
IndustryFinancial institutions


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