Moody's rates Pyaterochka Ba3

Moody's Investors Service said it assigned a Ba3 corporate family rating and Aa3.ru long-term national scale credit rating to Pyaterochka Holding NV.

The outlook is stable.

Moody's said the ratings are supported by the large potential for further growth and development of the Russian large retail food market, the company's strong positions in its key markets of the Moscow region and St. Petersburg and access to other Russian regions through established franchise operations, management's track record of delivering high growth, high margins and some flexibility with respect to leverage, with an end-2005 estimated total adjusted net debt to EBITDAR of 2.1x.

The ratings are constrained by Pyaterochka's large capex program and spending on acquisitions to support the company's ambitious growth strategy, negative free cash flow in the medium term due to its large planned investments, growing competition in the Russian market and risks associated with operating in Russia's somewhat vulnerable economic and regulatory environment, the agency said.

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