Moody’s: VimpelCom notes B1

Moody's Investors Service said it assigned a provisional B1 senior unsecured rating and a loss given default assessment of LGD 5 to new proposed notes of about $1 billion issued by GTH Finance BV, guaranteed by VimpelCom Holdings BV.

The outlook is stable.

The agency also said it assigned provisional B1 ratings to GTH Finance's new notes to reflect VimpelCom's guarantee and the structural subordination of the notes to the senior group's debt, guaranteed by its main operating subsidiary VimpelCom PJSC, which has Ba3 ratings.

GTH Finance will issue the notes with the sole purpose of on-lending the proceeds to its parent company, Global Telecom Holding SAE.

The proceeds of the notes will be utilized for the repayment of an intra-company loan to VimpelCom and other corporate purposes, the agency said.

The rating on the notes is one notch below VimpelCom Ltd.'s corporate family rating to reflect their structural subordination to about 70% of the group's debt, Moody’s said.

The notes will be issued for the term of up to seven years and will rank pari passu with other existing and future indebtedness of VimpelCom holding structures, the agency said.

The ratings also reflect the company's position as the third-largest operator in Russia with 57 million subscribers, sharing a leadership position in the country's largest metropolitan market of Moscow, Moody’s said.

The ratings also consider VimpelCom's higher leverage, weaker profitability and elevated foreign-currency risk as compared to its peers, the agency said.

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