ACRA ASSIGNS A+(RU) TO 001Р-03 SERIES (RU000A104ZK2) BOND ISSUED BY LLC "MV FINANCE"

Credit rating rationale. LLC "MVM" (hereinafter, MVM, or the Company; ACRA rating A+(RU), outlook Stable) acts as the guarantor for this bond issue of LLC "MV FINANCE". The issue is a senior unsecured debt instrument of the Company. In view of the absence of either structural or contractual subordination of the issue, ACRA regards it as pari passu with other existing and future unsecured and unsubordinated debt obligations of the Company. According to ACRA’s methodology, the issue’s credit rating is on par with that of the Company — A+(RU).

ACRA notes that in the current situation, the Company is forced to restructure and optimize its business model because some of the largest suppliers and manufacturers of household appliances and electronics have left the Russian market (in the Agency’s opinion, this will lead to a decrease in the Company’s gross margin and worse procurement conditions) against the backdrop of stagnant consumer demand. The Company’s positive performance in Q1 2022 is likely to be offset by subdued results in Q2 this year. The Agency believes that the Company will be able to optimize its business model by reducing part of its operating costs, despite changes to the Company’s procurement process and the offered line of brands. However, the possibility of new sanctions that could affect international transfers and newly built supply chains, and weakening consumer demand in the segment, could significantly complicate the process of restructuring MVM’s business and maintaining profitability. ACRA will carefully monitor the Company to see whether its business optimization is successful in the current environment.

The credit rating of the Company is based on the very strong support from PJSC "M.Video" (hereinafter, M.Video–Eldorado Group), and the high dependence of MVM and the M.Video–Eldorado Group on homogenous risk factors.

Key issue properties

Sources: ACRA, issuer’s data

regulatory disclosure

The credit rating has been assigned to the 001Р-03 series bond (RU000A104ZK2) issued by LLC "MV FINANCE" 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 001Р-03 series bond (RU000A104ZK2) issued by LLC "MV FINANCE" for the first time. The credit rating is expected to be revised within one year following the publication date of this press release.

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

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

ACRA provided no additional services to LLC "MV FINANCE" and LLC "MVM". No conflicts of interest were discovered in the course of credit rating assignment.