On establishing long-term credit ratings for investing servicemen pension and housing savings

At its 1 June 2018 meeting, the Bank of Russia Board of Directors decided, for the purposes Bank of Russia Regulation No. 580-P, dated 1 March 2017, ‘On Additional Restrictions on Investing Pension Savings Placed with Non-governmental Pension Funds Providing Mandatory Pension Insurance; on Cases When a Management Company Acting as a Trustee of Pension Savings Is Entitled to Execute Repo Agreements; on Requirements Aimed at Risk Mitigation the Observance Whereof Entitles the Management Company to Execute Derivative Contracts; on Additional Requirements for Credit Institutions Which Servicemen Pension and Housing Savings are Placed with; and on the Additional Requirement for the Management Company to Finance Funded Pension under Pension Savings Trust Management Agreement’, further referred to as the Regulation:

1. To establish, for the purposes of the second and third paragraphs of Subclause 1.1.2 of Clause 1.1 of the Regulation, the following credit institutions’ credit rating for the bond issue (including subordinated bonds) acquired after 13 July 2017 at the expense of pension savings:

for Russian rated entities — ruA- on the national rating scale for the Russian Federation in the classification of the rating agency JSC Expert RA (hereinafter, JSC Expert RA) or A-(RU) on the national rating scale for the Russian Federation in the classification of ACRA JSC (hereinafter, ACRA).

To establish the following credit ratings for the issuer or surety (guarantor) of such bonds:

for Russian rated entities — ruA- on the national rating scale for the Russian Federation in the classification of JSC Expert RA or A-(RU) on the national rating scale for the Russian Federation in the classification of ACRA;

for foreign rated entities — sovereign credit rating for the Russian Federation in respective currency on the international rating scale by at least one of the following rating agencies Fitch Ratings, S&P Global Ratings, Moody’s Investors Service (hereinafter, foreign rating agencies), decreased by two notches.

2. To establish, for the purpose of paragraph three of Subclause 1.1.2 of Clause 1.1 of the Regulation, the following credit ratings for bond issues (excluding credit institutions’ bond issues) acquired at the expense of pension savings after 13 July 2017 (in absence of the issue rating, the credit rating for the issuer or surety (guarantor) of such bonds):

for Russian rated entities — ruBB+ on the national rating scale for the Russian Federation in the classification of JSC Expert RA or BB+(RU) on the national rating scale for the Russian Federation in the classification of ACRA;

for foreign rated entities — sovereign credit rating for the Russian Federation in respective currency on the international rating scale by at least one of the foreign rating agencies, decreased by five notches.

3. To establish, for the purposes of paragraph two of Subclause 1.1.2 of Clause 1.1 of the Regulation, as regards the issue of subordinated bonds of credit institutions acquired at the expense of pension savings before or on 13 July 2017 (in absence of the issue rating, the rating of the issuer of such bonds or the rating of surety (guarantor) for such bonds), the credit rating which meets the requirements of Clause 1 of this decision or which meets credit rating requirements as per the Bank of Russia Board of Directors’ decision dated 23 December 2016 for the purposes of paragraph three of Subclause 1.4.7 of Clause 1.4 of Bank of Russia Regulation No. 451-P, dated 25 December 2014, ‘On Additional Restrictions on Investing Pension Savings Placed with a Non-governmental Pension Fund Providing Mandatory Pension Insurance, Additional Requirements for Credit Institutions with Which Servicemen Pension and Housing Savings are Placed, and Additional Requirements for Management Companies under Pension Savings Trust Management Agreement’, hereinafter, Regulation No. 451-P);

4. To establish, for the purposes of paragraph three of Subclause 1.1.2 of Clause 1.1.of the Regulation, for bond issues (excluding credit institutions’ subordinated bonds) acquired at the expense of pension savings before or on 13 July 2017 (in absence of the issue rating, the rating of the issuer of such bonds or the rating of surety (guarantor) for such bonds), to establish credit rating compliant with the requirements of Clause 1 or 2 of this decision or with respective requirements for credit ratings set by the decision of the Bank of Russia Board of Directors dated 23 December 2016 for the purposes of paragraph two of Subclause 1.4.7 of Clause 1.4 of Regulation No. 451-P;

5. To establish, for the purposes of Subclause 1.1.6 of Clause 1.1.of the Regulation, that the credit rating of the credit institution, where a subordinated deposit is placed, shall be at least ruAAA on the national rating scale for the Russian Federation in the classification of JSC Expert RA or AAA(RU) on the national rating scale for the Russian Federation in the classification of ACRA.

6. To establish, for the purposes of paragraph six of Subclause 1.4.4 of Clause 1.4 of the Regulation, the following credit ratings for bond issues (excluding credit institutions’ subordinated bonds) acquired at the expense of pension savings after 13 July 2017 (in absence of the issue rating, the credit rating of the issuer of such bonds or the surety (guarantor) for such bonds):

for Russian rated entities — ruBBB+ on the national rating scale for the Russian Federation in the classification of JSC Expert RA or BBB+(RU) on the national rating scale for the Russian Federation in the classification of ACRA;

for foreign rated entities — sovereign credit rating for the Russian Federation in respective currency on the international rating scale by at least one of the foreign rating agencies, decreased by three notches.

7. To establish, for the purposes of paragraph six of Subclause 1.4.4 of Clause 1.4 of the Regulation, for bond issues (excluding credit institutions’ subordinated bonds) acquired at the expense of pension savings before or on 13 July 2017 (in absence of the issue rating, the rating of the issuer of such bonds or the rating of surety (guarantor) for such bonds), a credit rating compliant with the requirements of Clause 6 of this decision or with respective requirements set by the decision of the Bank of Russia Board of Directors dated 23 December 2016 for the purposes of Subclause 1.5.6 of Clause 1.5 of Regulation No. 451-P;

8. For the purposes of Clause 1.6 of the Regulation, to establish the following credit ratings of securities issuer referred to in paragraph two of Clause 1 of Article 36.15 of Federal Law No. 75-FZ, dated 7 May 1998, ‘On Non-governmental Pension Funds’ and those acquired at the expense of pension savings after 13 July 2017:

for Russian rated entities — ruAAA on the national rating scale for the Russian Federation in the classification of JSC Expert RA or ААА(RU) on the national rating scale for the Russian Federation in the classification of ACRA;

for foreign rated entities — a sovereign credit rating for the Russian Federation in respective currency on the international rating scale by at least one of the foreign rating agencies.

9. To establish that, for the purposes of Clause 1.6 of the Regulation, the credit rating of the issuer of securities referred to in paragraph two of Clause 1 of Article 36.15 of Federal Law No. 75-FZ, dated 7 May 1998, ‘On Non-governmental Pension Funds’ and those acquired at the expense of pension savings before and on 13 July 2017, shall meet the requirements of Clause 8 of this decision or the respective requirements for credit ratings set by the decision of the Bank of Russia Board of Directors, dated 23 December 2016, for the purposes of Clause 1.6 of Regulation No. 451-P.

10. To establish, for the purposes of Subclause 2.1.3 of Clause 2.1 of the Regulation, the following credit ratings for credit institutions: ruA- on the national rating scale for the Russian Federation in the classification of JSC Expert RA or A-(RU) on the national rating scale for the Russian Federation in the classification of ACRA; or, before and on 13 July 2017, the credit institution’s credit rating shall meet the credit requirements set by the decision of the Bank of Russia Board of Directors, dated 23 December 2016, for the purposes of Subclause 2.1.3 of Clause 2.1 of Regulation No. 451-P.

11. To use the following types of credit ratings by foreign credit rating agencies:

ratings by Fitch Ratings — Issuer Default Rating, Corporate Finance Obligations Rating, Long-term Rating of Structured Finance, and Project Finance and Public Finance Obligations;

credit ratings by S&P Global Ratings — Issuer Credit Rating, and Long-term Issue Credit Rating;

credit ratings by Moody’s Investors Service — Issuer Rating, Corporate Family Rating, Structured Finance Issuer Rating, Long-Term Corporate Obligation Rating, Structured Finance Long-Term Rating, and Bank Deposit Rating. Corporate Family Rating is used with regard to an entity only if this rating is directly assigned to such entity.

12. To use the rating in the classification of S&P Global Ratings with the ‘p’ index specifying that the rating is set only for obligations under the payment of par value of bonds and applies only to the issues of bonds whereupon interest rate (coupon) payments are calculated according to a formula with variables (except for interest rates and the rate of inflation).

13. To use the following types of credit ratings by JSC Expert RA and ACRA:

ratings by JSC Expert RA — bank credit ratings, credit ratings of regional and municipal authorities of the Russian Federation, credit ratings of non-financial companies, credit ratings of holding companies, credit ratings of special purpose vehicles, credit ratings of microfinance organisations, credit ratings of leasing companies and credit ratings of debt instruments assigned on a national rating scale for the Russian Federation;

ratings by ACRA — credit ratings assigned on the national rating scale for the Russian Federation.

14. A rating notch is construed as its gradation expressed through figures and symbols (‘+’, ‘-’, 1, 2, 3).

15. This decision is to be applied from the day it is published on the Bank of Russia website.

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