Moody’s affirms rating of Russia’s Promsvyazbank at B2
MOSCOW, Dec 21 (PRIME) -- International rating agency Moody’s has confirmed the long-term senior unsecured debt and deposit ratings of Russia’s Promsvyazbank in foreign and local currencies at B2 with a developing outlook, the agency said in a statement late on Wednesday.
The agency also downgraded the bank’s baseline credit assessment (BCA) and adjusted BCA ratings to ca from caa1 and foreign-currency subordinated debt ratings to C from Caa2 and to C(hyb) from Caa3(hyb), Moody’s said.
The agency downgraded the long term local- and foreign-currency issuer ratings of the bank’s core owner, Netherlands-based Promsvyaz Capital B.V., to Ca from Caa1and affirmed short-term local- and foreign-currency issuer ratings of the company at Not Prime.
The decision follows the December 15 announcement of introduction of a temporary administration at Promsvyazbank by the central bank of Russia. The regulator said that it would not impose a payment moratorium on creditors' claims and would provide financial support to the bank, the agency said.
The central bank’s “action indicates that the support it will provide is necessary for the bank to remain a going concern and avoid default. This is consistent with a BCA of ca, indicating the bank's failure to continue its operations on a standalone basis,” Moody’s said.
“Moody’s expects that the central bank's due diligence will likely lead to significant losses and consequent reduction in Promsvyazbank’s capital. This will trigger the write-off or conversion of subordinated debt and hybrid subordinated debt into equity, resulting in limited recovery for these bondholders, reflected in the downgrade of the ratings to C and C(hyb), respectively,” the agency said.
Moody’s also improved the probability of provision of government support for Promsvyazbank’s creditors to “very high” from “high”, but the support will not cover owners of subordinated liabilities of the bank.
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