Research Update: Russian Operating Holding Sistema 'BB' Rating Affirmed Following Similar Action On Subsidiary; Off Watch; Outlook Stable Feb 12

Standard & Poors, February 2012

Abstract
We have affirmed our 'BB' rating on Russia-based Mobile TeleSystems (OJSC) (MTS), the strongest subsidiary of operating holding company Sistema (JSFC). We consider the credit quality and corporate governance of Sistema and MTS to be closely linked. We are affirming our rating on Sistema at 'BB' and removing it from CreditWatch negative. The stable outlook reflects our forecast of strong performance at Sistema's two largest subsidiaries, which should help gradually reduce leverage. On Feb. 3, 2012, Standard & Poor's Ratings Services affirmed its 'BB' long-term corporate credit rating on Russian operating holding company Sistema (JSFC). At the same time, the rating was removed from CreditWatch, where it was placed with negative implications on Aug. 2, 2011. The outlook is stable....

Companies mentioned in this report are: Sistema (JSFC),Mobile TeleSystems (OJSC),MTS International Funding Ltd.
Action: Affirmed
Action: Outlook: Stable

Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.

Product Type: Research Update
Research updates complement media releases. They offer more depth and detail than summary analyses by incorporating all information published in the media release. They are more up to date than summaries in that they are published simultaneously with media releases.

Sistema (JSFC),Mobile TeleSystems (OJSC),MTS International Funding Ltd.

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