Taking into account legislative requirements on rating activities, the Bank of Russia Board of Directors decided to clarify the approaches used to compile the Bank of Russia Lombard List (hereinafter, the Lombard List).
From 14 July 2017, the issues (issuers)1 of all bonds to be included in the Lombard List will need to have BBB(RU) credit rating, or above, assigned by the credit rating agency ACRA (JSC). These securities include the following: bonds issued by the constituent territories of the RF and municipal bonds, bonds issued by RF resident legal entities, including the bonds of mortgage agencies and mortgage-backed bonds.
The Bank of Russia may further judge it possible to use credit ratings assigned by other credit rating agencies (included in the register of credit rating agencies by the Bank of Russia), when compiling the Lombard List.
Apart from the fact that securities issues (issuers) shall be assigned the said credit rating by ACRA (JSC), Bank of Russia decisions on including securities in the Lombard List will be based on the results of its assessment of the credit quality of the securities issues (issuers’ solvency), terms of their placement and circulation, and other material circumstances.
Alongside the above, there will remain a chance for the following securities to be included in the Lombard List, namely: bonds issued by the constituent territories of the RF, municipal bonds, bonds issued by resident legal entities, bonds issued by mortgage agencies and mortgage-backed bonds, whose issues (issuers) have not been assigned credit ratings in line with Bank of Russia requirements, if their performance is secured by the RF government guarantees or the joint surety of AHML (JSC) (for mortgage-based bonds).
From 14 July 2017, changes will be also introduced to the requirements for the credit ratings assigned to foreign issuers’ bonds included in the Lombard List: minimum credit rating assigned to the issue (issuer) of debt issue-grade securities of international financial institutions, as well as minimum credit rating assigned to the issue of debt issue-grade securities issued by non-resident legal entities outside the Russian Federation, and debt issue-grade securities issued by non-resident legal entities and placed in the Russian Federation, shall be set at BB- / Ba3 according to the classification of credit rating agencies S&P Global Ratings, Fitch Ratings / Moody’s Investors Service.
All bond issues included in the Lombard List as of 14 July 2017, shall be held in the Lombard List till redemption (excluding cases when securities are removed from the Lombard List owing to the issuer’s unsatisfactory financial standing (in the Bank of Russia’s opinion) or because securities of a respective category are removed from the Lombard List).
1 Due account shall be taken of the rating assigned to the issue of respective bonds. If securities issues have not been assigned any credit rating, the Bank of Russia takes account of the credit rating assigned to the issuer of such bonds (excluding debt issue-grade securities issued by non-resident legal entities outside the Russian Federation, bonds issued by non-residents and placed in the Russian Federation, structured bonds and bonds issued as part of securitisation transactions which require that securities issues be assigned credit ratings in all cases).