Fitch rates Tele2 Russia bonds

Fitch Ratings said it assigned an expected BB+ long-term senior unsecured rating to Tele2 Russia Holding AB's domestic bonds series-07, along with an AA(rus) national long-term rating.

The bonds are expected to be issued by OJSC Saint-Petersburg Telecom, which is a subsidiary of Tele2 Russia. The series-07 RUB 6 billion bonds will have a stated maturity of 10 years and an attached put option in year three.

Fitch said it expects that bondholders will benefit from an irrevocable undertaking by Tele2 Russia Holding and Tele2 Financial Services AB, a treasury company for Tele2R, which will make this instrument effectively recourse to the Tele2R group.

The mechanism of irrevocable undertakings (essentially an offer to purchase the bonds if the issuer is in default) will expose bondholders to the same probability of default and expected recoveries as senior unsecured creditors to Tele2R, the agency said.

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