Standard & Poor’s has assigned a BBB rating to a Rub5bn (Eu120m) five year mortgage covered bond to be issued by Russia’s ZAO UniCredit Bank, it said today (Wednesday).

The rating is based entirely on the rating agency’s long term local currency issuer rating on UniCredit Russia (BBB, stable outlook), and does not take into account the mortgage coverage, said S&P.

The bonds form part of UniCredit Russia’’s mortgage covered bond programme, and the first series has a five year maturity and a fixed semi-annual interest rate.

“We understand that the proceeds will be used for general banking purposes,” said the rating agency.

UniCredit Russia is a fully owned subsidiary of UniCredit Bank Austria.

“The long term rating on UniCredit Russia incorporates a three notch uplift from our assessment of its standalone credit profile to reflect our view that it is strategically important to its parent,” said S&P. “We believe UniCredit Austria would very likely provide extraordinary support to its Russian subsidiary in case of need.”