ACRA AFFIRMS ААA(RU) TO THE RU000A1018M7 BOND ISSUE OF LIMITED LIABILITY COMPANY “SPECIAL ORGANIZATION FOR PROJECT FINANCE FACTORY OF PROJECT FINANCE”

Credit rating rationale. In ACRA’s opinion, the bonds issued by Limited liability company “Special Organization for Project Finance Factory of Project Finance”, a full subsidiary of VEB.RF (ACRA rating AAA(RU), outlook Stable) are subject to the same risk level as VEB.RF. Additional security under this transaction is provided by a state guarantee from the Russian Federation. ACRA has affirmed the credit rating of this debt instrument at AAA(RU).

KEY ISSUE PROPERTIES

Sources: ACRA, Issuer’s data

KEY ASSESSMENT FACTORS

The credit rating is based on the financial support from VEB.RF and a guarantee provided by the Russian Federation. This rating only applies to the Issuer’s RUB 10 bln bond issue (ISIN RU000A1018M7) and is not an assessment of the ‘Factory of Project Finance’ program (hereinafter, the Program) approved by Regulation No. 158 of the Government of the Russian Federation dated February 15, 2018 “On the ‘Factory of Project Finance’ program”¹ (hereinafter, the Regulation). ACRA has not analyzed any of the Issuer’s underlying assets (projects) under the Program.

VEB.RF will provide credit support to the bond issue until the bond’s maturity date via the mechanisms specified below.

• VEB.RF is obliged to buy back all defaulted assets, if any, in the Issuer’s portfolio within five business days in accordance with the Regulation (together with the “Rules for providing subsidies from the federal budget in the form of property contributions from the Russian Federation to State Development Corporation “VEB.RF” for reimbursement of expenses in connection with the provision of loans as part of the Factory of Project Finance”).

• In addition, VEB.RF has provided the Issuer with a facility worth up to RUB 20 bln to support its short-term liquidity. According to the Regulation, in order to financially secure the Issuer’s obligations, VEB.RF is obliged to provide it with any other forms of non-refundable financial support. ACRA did not take this factor into account in its analysis, since ‘other forms’ have not been clearly defined yet. Nevertheless, the mechanisms described above, in ACRA’s opinion, sufficiently confirm that the credit risk of the Issuer’s bond issue (ISIN RU000A1018M7) and the credit risk of VEB.RF are equivalent.

In order to further enhance the credit quality of this issue, the Ministry of Finance of the Russian Federation issued a guarantee (Guarantee No. 04-04-10/520, dated December 29, 2018) worth up to RUB 294 bln to cover the principal value of the bonds if the Issuer defaults (or VEB.RF defaults on its financial support obligations described above).

¹ Regulation No. 158 of the Government of the Russian Federation dated February 15, 2018 (as amended on November 9, 2022) “On the ‘Factory of Project Finance’ program” (together with the “Rules for providing subsidies from the federal budget in the form of property contributions from the Russian Federation to State Development Corporation “VEB.RF” for reimbursement of expenses in connection with the provision of loans as part of the Factory of Project Finance”).

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 Financial Instruments under 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.

The credit rating of the bond issue (RU000A1018M7) of Limited liability company “Special Organization for Project Finance Factory of Project Finance” was published by ACRA for the first time on February 7, 2020. 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 Limited liability company “Special Organization for Project Finance Factory of Project Finance”. The credit rating is solicited and Limited liability company “Special Organization for Project Finance Factory of Project Finance” 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.

Disclosure of deviations from approved methodologies: the Agency deviated from the Methodology for Assigning Credit Ratings to Financial Instruments under the National Scale for the Russian Federation with regard to the criterion of unconditionality and irrevocability of the guarantee instruments in determining the source of funds necessary to redeem the issue. ACRA assumes that regardless of the presence of formal signs of revocability of the guarantee instruments, the current transaction structure, from an economic point of view, allows the guarantee instruments to be determined as irrevocable and unconditional.

ACRA provided no additional services to Limited liability company “Special Organization for Project Finance Factory of Project Finance”. No conflicts of interest were discovered in the course of credit rating assignment.