OREANDA-NEWS. Fitch Ratings has assigned Ireland-based GTLK Europe Limited's upcoming issue of USD-denominated guaranteed notes an expected 'BB-(EXP)' rating.

GTLK Europe is a 100%-owned Irish subsidiary of Russia-based PJSC State Transport Leasing Company (STLC, BB-/Negative), acting as an operating entity utilising the favourable tax and regulatory regimes of Ireland for leasing of aircraft and ships. The notes will represent direct, unsubordinated and unsecured obligations of GTLK Europe and will benefit from an unconditional and irrevocable guarantee from STLC.

The proceeds will be used mainly for general corporate purposes by GTLK Europe and to redeem intergroup debt raised from the parent, STLC. A smaller part will be used to refinance other USD-denominated borrowings.

The facility agreement includes financial covenants (maintenance of positive net income and an equity-to-assets ratio of above 10%). The terms of the issue also provide noteholders with a put option in case of the Russian sovereign ceasing to control more than 75% of STLC's and/or GTLK Europe's equity.

KEY RATING DRIVERS

The notes' rating is equalised with the STLC's Long-Term Foreign Currency Issuer Default Rating (IDR) of 'BB-', reflecting Fitch's view that STLC, if required, would have a very strong propensity to honour the obligation under the guarantee due to its publicly expressed commitment to do so, and potential reputational damage from not honouring the obligation.

STLC's Long-Term IDR in turn reflects Fitch's view of a moderate probability of support for the company, if needed, from the Russian sovereign (BBB-/Negative). For details see 'Fitch Rates Russian STLC 'BB-'; Outlook Negative' dated 16 June 2015 on www. fitchratings. com.

RATING SENSITIVITIES

The rating of the issue is likely to move in tandem with STLC's Long-Term Foreign Currency IDR.