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The Rating Agency ACRA Raises Setl Group's Credit Rating to BBB+(RU) with a "Stable" Outlook and that of its Bond Issue to BBB+(RU)

2018 june 19

On June 19, 2018, the national rating agency ACRA raised the credit rating of Setl Group LLC to BBB+(RU) with a “Stable” outlook, which is currently ACRA’s highest public credit rating awarded to companies in the construction and real estate sector. ACRA also assigned the BBB+(RU) credit rating to Setl Group LLC’s issue of exchange-traded interest-bearing documentary bonds (RU000A0ZYEQ9). According to the agency, the raising of the credit rating of Setl Group LLC (the "Company", "Setl Group") is associated with positive changes in the level of debt burden and debt service performance, with the prospects for profitability growth and with an increase in the assessment of the Company's operational risk profile (among other factors, due to the growth of financial transparency). The credit rating of Setl Group is determined by its very strong business profile, high profitability of the business, a very low debt burden and a very strong liquidity. The "Stable" outlook implies with the highest probability that the rating will not change within the next 12 to 18 months. According to the agency's analysts, the very strong business profile is due to the high diversification of the portfolio of projects, the stable structure of the timing and conditions for the sale of sites and due to the special advantages associated with the strong positions of its brokerage and consulting divisions in the St. Petersburg market. The very low debt burden and the high profitability of the business are largely due to the ability of Setl Group to fulfil the sales plan, which makes it possible to finance construction for the most part at the expense of earnings under co-investment agreements. Historically, the Company has managed to sell most of the spaces as early as by the time the site is commissioned. The debt burden has a very low ratio of net debt to FFO (funds from operations) before net interest payments: according to ACRA, the weighted average for 2015-2020 will be 0.7x. Besides, the BBB+ (RU) credit rating was assigned to the issue of Setl Group LLC’s exchange-traded interest-bearing documentary bonds. According to the agency, the issue is the senior unsecured debt of the Company. According ACRA’s method, the level of reimbursement for unsecured debt is included in category II, and therefore the credit rating of the issue is equal to the credit rating of Setl Group LLC, i.e. BBB+(RU). On November 2, 2017, Setl Group LLC placed by public offering 5 million bonds of the 001P-01 series (identification number 4B02-01-36160-R-001P of October 26, 2017). The complete text of ACRA’s press release can be found on the official website of the agency at: https://www.acra-ratings.ru/press-releases/786

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Companies of Setl Group holding