S&P rates Pyaterochka bonds ruAA-

Standard & Poor's said it assigned a BB- corporate credit rating to Pyaterochka Holding NV, BB- corporate credit and ruAA- Russia national scale ratings to operating subsidiary OOO Agrotorg and a ruAA- Russia national scale rating to Pyaterochka Finance's RUR1.5 billion series 1 and RUR3 billion series 2 bond issues.

The outlook is stable.

S&P said the ratings on Pyaterochka are constrained by the group's aggressive growth appetite, by the uncertainties associated with Russia's administrative, economic and social environment and by the group's exposure to the complex and nontransparent Russian real-estate industry. Furthermore, there is the potential for intensifying competition that could create pressure on the group's operating margins.

Moderating these risks is the group's leading market position as the largest grocery retailer in a retail market that has sound growth potential and continuing solid revenue, profitability and cash flow growth. In addition, the agency said that Pyaterochka has a proven effectiveness in cost control and logistics management, which has been complemented by the strategic ownership and expansion of relevant infrastructure.

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