OREANDA-NEWS. S&P Global Ratings today assigned its 'B+' issue rating to the U. S. dollar senior unsecured notes that will be guaranteed by Russia-based O1 Properties Ltd. (O1; B+/Negative/--) and issued by O1 Properties Finance.

We equalize the issue rating with our 'B+' long-term corporate credit rating on O1 to incorporate our view of recovery prospects of more than 30% in the event of a default of the proposed notes. The issuer, Cyprus-based O1 Properties Finance, is a fully owned subsidiary of O1.

We believe the recovery prospects for the notes will exceed 30%, despite a significant amount of secured debt at O1's operating companies. O1 owns a large portfolio of prime assets in the center of Moscow and, even after a 30% haircut, the portfolio's residual value is enough to support recovery prospects of more than 30% for the noteholders. We view it as unlikely that the portfolio value might decrease by more than 30%, due to its high quality, reflected in the location of the assets, tenant structure, and occupancy rate.

We expect the notes' proceeds will be used mainly to refinance O1's secured debt. We expect the company's liquidity will improve after this issuance, since headroom under the existing covenants on the secured debt will increase after the transaction.