Press Releases / 04.04.2014

Press Release as of 04.04.2014

TCS-Management LLC

CJSC AK&M Rating Agency affirmed the national scale reliability rating of TCS-Management LLC at 'A+' lifting the outlook from stable to positive.

The 'A+' rating indicates that the limited liability company Trewetch Corporate Services – Management maintains a very high level of reliability. Risk of a failure to meet obligations in full and in time is insignificant.

The Company's rating reflects its capacity to fully and timely meet its obligations arising from being the sole executive body for mortgage agents, i.e. special-purpose vehicles set up exclusively to acquire receivables on loans secured by mortgage, to later issue and service mortgage-backed debt securities (MBS).

The higher outlook on TCS-Management's rating primarily reflects its significantly higher scale of operations and impressive business expansion. In 2013 alone, the mortgage agents affiliated with the TCS group placed 4 mortgage bond issues, as many as for the whole preceding period of the Company's existence in the mortgage securities market. Also, CJSC Eastern-Siberian mortgage agent 2012 managed by the Company directly participated in the first ever multi-originator deal in Russia's mortgage securitization market where the agent's bonds were collateralized by the mortgage bonds provided by five mortgage market players including OJSC AHML.

Mortgage agent AHML 2011-1 has placed the third issue of its debt securities, which we regard as a positive rating driver. This, in a way, is a record achievement for the domestic mortgage asset securitization market indicating the domestic mortgage market leader's growing confidence in the Company. The latter is proven by AHML's decision (made in February 2014) to authorize the TCS group as a corporate service provider to accomplish 10 scheduled transactions within the framework of the multi-originator vehicle (MOV) mortgage securitization platform.

TCS-Management LLC is constantly increasing the amount of new business (the nominal value of the affiliated mortgage agents' new MBS issues): RUB 2.217 billion in 2009, RUB 3.725 billion in 2011 (increasing 1.7 times), RUB 6.722 billion in 2012 (increasing 3 times), RUB 11.325 billion in 2013 (increasing 5.1 times). While trailing the average market performance (1.9, 3.4 and 6.1 times, respectively), this growth still indicates a positive trend in the Company's business development.

The mortgage agents authorizing TCS-Management LLC to be their executive body are operating in full compliance with federal laws 152-FZ "On mortgage-backed securities", 39-FZ "On securities market" and other regulatory instruments issued by state administrative and supervisory bodies. Coupon and nominal principal payments on the mortgage bonds are effected in due time (4 times a year) and in full (meeting the terms of bond offering).

The financial position of TCS-Management LLC may be regarded as fairly stable. The Company's debt burden mainly arises from non-financial accounts payable (current obligations to mortgage agents pursuant to advances received), net debt to revenue ratio as of December 31, 2013 being 0.53. The Company's comfortable liquidity position (105% as of the same date) is also contributing to its rating. On the whole, the current financial standing of TCS-Management LLC enables it to focus entirely on its core business: being the sole executive body for mortgage agents. This strong foundation is of great importance, given the Company's ambition to expand the business horizon including, but not limited to, operations beyond the mortgage securitization market.

At the same time, the Company's weaker market position against its sole competitor (TMF-RUS LLC) puts moderate pressure on the Company's rating. As of December 31, 2013 the TCS group accounted for 22.9% of the total number of MBS issues, 9.7% of the total nominal amount (at the moment of placement) of the mortgage bonds issued in the Russian SPV mortgage securitization market.

TCS-Management LLC has been operating in the mortgage securitization market since 2009. Today, the Company is the sole executive body for the closed joint-stock companies Mortgage Agent of MBRD, Mortgage Agent of AHML 2011-1,Mortgage Agent HFB-1, Mortgage Agent Absolut, Mortgage Agent FORA, Eastern-Siberian mortgage agent 2012, First St. Petersburg Mortgage Agent, FEMLC-1 Mortgage Agent, Mortgage agent Vozrozhdenie 3, Multi-originator Mortgage Agent 1. Investment Company TREWETCH Investments Ltd registered in Cyprus owns 99% of the authorized capital of TCS-Management LLC. The Chief Executive Officer of TCS-Management LLC is Tatyana Kachalina, an internationally rated corporate law, capital market, project financing, securitization and M&A expert.

The Company's auditor is AUDIT-ESCORT LLC (principal number of registration entry 10201047570), a member of SRO Nonprofit Partnership Audit Chamber of Russia.

This press release is based on the statement of assigning a reliability rating to TCS-Management LLC.

CJSC AK&M Rating Agency will not incur any responsibility for any interpretations, inferences and consequences related to the application of results of the rating estimation procedure by any third parties.


CJSC AK&M Rating Agency
ul. Gubkina 3
Moscow, Russia
Phone no. (495) 916-70-30, fax no.: (499) 132-69-18