Fitch cuts Sistema-Hals

Fitch Ratings said it downgraded JSC Sistema-Hals' long-term issuer default rating to CCC from B-. Fitch has simultaneously downgraded the short-term issuer default rating to C from B and removed the Rating Watch negative.

The national long-term rating is downgraded to B- from BB-. The long-term issuer default rating and national long-term rating remain on Rating Watch negative.

The rating action reflects a recent clarification on parental support for Sistema-Hals from its major shareholders, Bank VTB JSC (BBB/negative) and Sistema Joint Stock Financial Corp. (BB-/stable), and the company's ongoing weak underlying trading profile.

Due to a lack of cash resources, Sistema-Hals was unable to meet a scheduled coupon payment of on Oct. 13 on its RUB 3 billion series 1 bond due 2014 and entered into a grace period. However, Fitch said that the coupon payment has since been made.

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