Moody’s gives B1 to Autobann bonds

Moody's Investors Service said it assigned a B1 (LGD4) rating to the proposed RUB 3 billion senior unsecured rouble-denominated bonds due in 2024 to be issued by the Autobann (LLC Soyuzdorstroy) via its subsidiary Avtoban-Finance, JSC.

The outlook is stable.

Avtoban-Finance will issue the bonds for the sole purpose of financing loans to Autobann's key operating companies – OAO DSK Autobann and OAO KhMDS – and will rely on these two main operating subsidiaries of the group to service the bonds.

The agency expects the proceeds will be mostly used for repayment of part of the group's existing debt.

Moody’s said the B1 rating assigned to the domestic bond is in line with Autobann's B1 corporate family rating, which reflects its: (a) Small scale relative to its global peers; (b) reliance on the Russian road construction market, which is under ongoing pressure from the constrained state budget; (c) high project and customer concentration; (d) in-year liquidity volatility, with costs incurred throughout the year but contract receipts clustered towards the end of each year; and (e) corporate governance risks associated with the company's single shareholder structure.

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