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S&P: Ratings Assigned To First Ever Russian Factoring Receivables ABS Transaction

February 01, 2008 | Сbonds

LONDON (Standard & Poor's) Jan. 31, 2008—Standard & Poor's Ratings Services
said today that it has assigned its credit ratings in the inaugural publicly
rated trade receivables transaction in Russia, a RUR8 billion securitization
of factoring receivables originated by Eurokommerz FC (EK).

The senior and mezzanine facility notes backed by these receivables have been
issued by a special-purpose entity called Russian Factoring No. 1 S.A. (see
list below).

EK is a factoring company based in Russia, specializing in the acquisition of
receivables from suppliers, in return for the provision of short-term funding
to cover their trade credit and prevent a timing mismatch in the budget.

EK is the largest factoring company in Russia. It has expanded rapidly, with
an increasing requirement for debt financing reflecting its increasing market
share and the overall growth of the factoring market in Russia. EK's market
share is 37% by number of clients, and 22% by value of receivables as of June
30, 2007.

As trade receivables transactions might have higher subordination requirements
to cover for possible commingling and fraud, it is not very common for
Standard & Poor's to be approached to assign ratings to those notes.

This transaction provides adequate cover for these risks. Subordination to the
senior notes is provided by a mezzanine loan facility, a subordinated loan
facility, and a deferred purchased price (DPP) on the securitized factoring
receivables. The transaction is protected by the margin trigger, DPP trigger,
and early amortization triggers.

The subordination is provided on a dynamic basis, which means that if the
losses on the portfolio increase the overcollateralization for the transaction
increases correspondingly. The dynamic enhancement is calculated on the basis
of Standard & Poor's trade receivables model.

The transaction uses Eurokommerz Cash Manager, a newly registered Russian
limited liability company, as the collection agent, to collect the repayments
from the debtors and customers. The collection agent is used to avoid the
issuer's receipts being commingled with originator's money. The commingling
risk is more pronounced given that almost 1.5% of the overall outstandings is
paid back on a single day, given the payment terms of the receivables.

A copy of Standard & Poor's complete New Issue report for this transaction,
dated Jan. 29, 2008, can be found on RatingsDirect, the real-time Web-based
source for Standard & Poor's credit ratings, research, and risk analysis, at
www.ratingsdirect.com. Alternatively, call Client Support Europe on (44)
20-7176-7176. Members of the media may contact the Press Office Hotline on
(44) 20-7176-3605 or via media_europe@standardandpoors.com. Local media
contact numbers are: Paris (33) 1-4420-6657; Frankfurt (49) 69-33-999-225;
Stockholm (46) 8-440-5914; or Moscow (7) 495-783-4017.


Russian Factoring No. 1 S.A.
RUR8 Billion Senior- And Mezzanine Facility Notes

Class Rating Amount (Bil. RUR)

Senior notes BBB 7.5

loan facility BB 0.5

Issue: EUROKOMMERZ, 2010 (ABS, Warehouse)

StatusDefaultCountry of riskMaturity (option)AmountIssue ratings (M/S&P/F)
redemption defaultYesRussia03/15/20104,180,000,000 RUB-/NR/Withdrawn


Full company nameEurokommerz
Country of riskRussia
Country of registrationRussia
IndustryFinancial institutions


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