Moody's drops Sistema

Moody's Investors Service said it has downgraded the Ba3 corporate family and probability of default ratings of Sistema JSFC to B1, and the senior unsecured rating of the existing $350 million bond of Sistema Capital SA to B2.

The outlook is negative.

According to the agency, the rating action takes into account several factors: (i) limited visibility with regard to the projected performance of the acquired assets and their contribution to the group's cash flow; (ii) increased contingent exposure at the Sistema level due to increased assumed levels of financial support required by Sistema's subsidiaries to cover their imminent operating and debt service needs; and (iii) concerns over refinancing and liquidity pressures in light of the limited access that Russian corporate borrowers are having to the international capital markets, particularly looking into 2010.

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