S&P lowers First Collection

Standard & Poor’s said it lowered the long-term issuer credit rating to B- from B on OJSC First Collection Bureau.

The agency also said it lowered the company’s Russia national scale rating to ruBBB from ruBBB+.

The outlook is stable.

The downgrades reflect a view of increasing risks stemming from the First Collection’s operational and strategic integration of National Recovery Service, S&P said.

The agency said it anticipates that the integration will negatively affect the company’s financial risk profile, mostly due to significant deterioration of the revenues from the agent collection business segment.

First Collection shareholders acquired National Recovery in December 2014 under favorable conditions and with their own funds, S&P said.

But, the agency said it anticipates that integration with National Recovery could hinder the group’s profitability in the medium term because operating margins of the agency-collection business are structurally lower than those of distressed-debt purchase businesses.

S&P added, however, that synergies between the two companies are gradually developing favorably.

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