The 'A' rating indicates that Small Business Targeted Guarantee Fund of Saratov Region qualifies as a highly reliable guarantee institution. The risk of a failure to meet obligations in time is low. The rating assignment was based on the Credit Rating Methodology for Guarantee Institutions rev. March 3, 2015.

The credit rating is essentially supported by the Fund's surety portfolio expansion, correlation between the sureties provided by the Fund and loans provided to SME businesses across industries in the region, a high guarantee capital multiple ratio.

Since entering the market, the guarantee institution concluded 436 surety agreements for a total amount of RUB 819 million, which enabled small and medium-sized businesses to take RUB 2.2 billion in loans. For the 9-month period in 2015, the Fund provided sureties for a total amount of RUB 101.7 million, more than 11% against the same period in 2014, which enabled small and medium-sized businesses to borrow RUB 231.2 million.

One of the key factors indicating the high performance of the guarantee institution is high correlation between the amount of sureties provided by it and the total amount of loans provided to SME entities across industries in the region. As of October 1, 2015, the correlation ratio reached 94.5%, an evidence of the almost complete correlation between the Fund's sureties and the loans provided to SME entities across industries in Saratov region.

We regard the high level of financial resource utilization when providing SME businesses with access to borrowings from partner banks as a positive rating driver. At the end of the third quarter of 2015, the capital multiple of the guarantee institution reached 141%.

At the same time, the rating is constrained by the Fund's growing loss ratio, poor quality of coverage.

For the 9-month period in 2015, JSC Fund discharged 10 payment obligations for a total amount of RUB 8.7 million. The total amount of obligations to partner banks since the Fund entered the market reached RUB 34 million; the Fund recovered RUB 6.2 million, the recovery ratio being 18.4%. It should however be noticed that the Fund has not received payments through applicable recourse procedures since 2014. The growing amount of obligations and the inability to improve the recovery of funds necessitate a more efficient risk management system. At the same time, while increasing from 2.7% to 3.4%, the Fund's loss ratio stays at an acceptable level.

Another point of concern for AK&M Rating Agency experts is that JSC Fund invested in a credit institution currently undergoing turnaround procedures and rated 'B+' on the AK&M Rating Scale, which substantially increases the Fund's risks to lose its money. It should be noted that JSC Fund also invested in credit institutions rated below 'A+' on the AK&M Rating Scale, which does not comply with the Ministry of Economic Development's requirements as regards guarantee institutions' deposits with a period of up to 1 year.

Full Fund name: Joint-stock company Small Business Targeted Guarantee Fund of Saratov Region

Short name: JSC Fund

Joint-stock company Small Business Targeted Guarantee Fund of Saratov Region was registered on October 8, 2007. Its sole shareholder is Saratov region represented by the Ministry of economic development and investment policy of the region.

AK&M Rating Agency assigns a reliability rating to JSC Fund for the first time. All rating action announcements are available on the akmrating.ru website.

The rating is valid until December 2016. AK&M Rating Agency may revise the rating and/or the outlook during this period if circumstances fundamentally influencing the guarantee institution's creditworthiness are revealed.

For estimation purposes, we completely rely on the reliability of information provided by the guarantee institution. The rationale for AK&M Rating Agency's judgment on the rating may include information acquired from other sources we deem to be reliable; however, the agency does not check the input data exhaustively and disclaims all responsibility for their possible errors.

This press release is based on the Statement of assignment of a credit rating to JSC Fund. The rating assignment was based on the Credit Rating Methodology for Guarantee Institutions rev. March 3, 2015.

The rating, along with any information and conclusions provided in this report, only conveys our opinion and shall not be construed as a recommendation to lend money resources to the Fund or to seek its guarantees and sureties.

AK&M Rating Agency shall not be held liable for any interpretations, inferences and consequences related to the application of results of the rating estimation procedure by any third parties.

AK&M Rating Agency is a leading independent national rating agency engaged in rating activities since 1993. CJSC AK&M Rating Agency is accredited by the Ministry of Finance of the Russian Federation (order no. 452 as of September 17, 2010) and is on the Central Bank of Russia's Register of Accredited Rating Agencies.

AK&M Rating Agency

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www.akmrating.ru

Phone no. (495) 916-70-30, fax no.: (499) 132-69-18.