Moody's rates MBRD notes B2

Moody's Investors Service said it assigned a B2 foreign currency debt rating to the upcoming loan participation notes to be issued by MB Capital SA on a limited recourse basis for the sole purpose of financing a subordinated loan to Moscow Bank for Reconstruction and Development ("MBRD"; B1/NP/E+). The outlook is stable.

The tentative size of the issue is $60 million, with final legal maturity of 10 years, redeemable by the bank five years after issue.

The underlying subordinated loan is expected to be treated as tier 2 capital for regulatory purposes, the agency said. The bank will have the right to prepay the loan, which would result in the notes becoming due and payable, if the loan does not qualify as tier 2 capital.

The notes, the subordinated loan agreement and the trust deed will be governed by English law. Moody's noted that there is a risk that, in the event of the insolvency of MBRD, Russian bankruptcy law could adversely affect the ability of the issuer, the trustee or the noteholders to recover sums owed by MBRD under the subordinated loan agreement.

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