Fitch rates NKNK notes B+

Fitch Ratings said it assigned NKNK Finance plc's proposed issue of $200 million loan participation notes an expected B+ rating. The notes are expected to have a maturity of 10 years but contain a five-year European put option and will be repaid in equal installments from 2010 with a straight line amortization.

NKNK Finance is a public limited liability company incorporated under the laws of Ireland. The company's purpose is to issue the notes and lend, under a loan agreement, the proceeds to Russian company OAO Nizhnekamskneftekhim (B+/stable/B), the agency said.

Nizhnekamskneftekhim will use the proceeds of the loan from NKNK Finance for general corporate purposes, including improving its balance sheet structure and financing its capital expenditure.

Covenants in the loan agreement include a pari passu ranking of the loan with present or future unsecured creditors of Nizhnekamskneftekhim and negative pledge. Nizhnekamskneftekhim also has a total consolidated debt-to-consolidated EBITDA ceiling of 3:1 Events of default include a cross default clause with a $10 million threshold, the agency said.

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