Moody's rates VTB Capital notes Baa2

Moody's Investors Service said it assigned a provisional rating of Baa2 to the U.S. dollar-denominated issue of subordinated loan participation notes due 2015 to be issued by VTB Capital SA. The issue amount is not yet known.

The notes to be issued by the special purpose vehicle will be used to fund a subordinated loan to the Open Joint Stock Co. Vneshtorgbank, a bank established under the laws of the Russian Federation.

Moody's said the prospective Baa2 rating of the notes is based primarily on the strength of the structure; the ability of VTB, the ultimate obligor in respect of payments under the notes, to make timely payments of interest and ultimate payment of principal on the subordinated loan; the charge and assignment of rights and interests by the special purpose vehicle to the trustee for the benefit of noteholders under English law.

Moody's stated that the prospective Baa2 rating incorporates the fundamental credit quality of VTB. The rating also reflects the probability of a sovereign default implied by Russia's Baa3 foreign currency bond rating and the likelihood that the Russian government could impose a debt moratorium in the event of default on its own foreign currency obligations.

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