Moody's rates Bank of Moscow notes Baa2

Moody's Investors Service said it assigned a Baa2 rating with a positive outlook to the new loan participation notes of Luxembourg-based special purpose vehicle Kuznetski Capital SA to be issued for the sole purpose of funding a loan to Moscow Municipal Bank - Bank of Moscow.

The amount of the issue in expected to be $300 million and will mature in November 2010. The price of the issue is 7.375%.

Moscow Municipal Bank - Bank of Moscow is majority-owned by the city of Moscow (rated Baa3 with positive outlook by Moody's) and as of Jan. 1 had the third-largest retail deposit base in Russia. The bank's ratings take into account not only the potential support the bank may receive from the city of Moscow, but more importantly the likelihood that Russia's central government may extend support to the bank in case of need.

Moody's noted that the Baa2 senior unsecured debt rating incorporates the bank's fundamental credit quality, which is reflected in the global local currency rating and which includes all relevant country risks. The rating also reflects the probability of a sovereign default implied by the Russian government's low investment-grade Baa3 (positive outlook) foreign currency bond rating and the likelihood that the Russian government could impose a debt moratorium in the event of default on its own foreign currency obligations.

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