Fitch rates Bank of Moscow notes BB+

Fitch Ratings said it assigned Kuznetski Capital SA's $300 million 7½% issue of limited-recourse loan participation notes due 2015 with interest rate step-up in 2010 a final long-term BB+ rating.

The notes are to be used solely for financing a subordinated loan to Russia's Bank of Moscow (BBB-/stable). Fitch said Kuznetski Capital will only pay noteholders principal and interest, if any, received from Bank of Moscow under the loan agreement.

The difference between the rating of the notes and Bank of Moscow's long-term rating reflects Fitch's notching policy for senior and more junior obligations, indicating the higher expected loss for more junior debt instruments.

The agency said the lender's claims in relation to repayment of the subordinated loan will be junior to those of all senior claims and will rank at least pari passu with the claims of other subordinated creditors of Bank of Moscow.

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