Concorde Capital Research: Moody’s upgrades Oschadbank, Ukeximbank bonds to Caa2

August 31, 2017 - Cbonds

 

Moody's Investors Service upgraded the Eurobond ratings of Oschadbank (OSCHAD) and Ukreximbank (EXIMUK) to Caa2 (from Caa3) and upgraded their rating outlook to positive (from neutral), the agency reported on Aug. 30. The ratings and outlooks were upgraded to sovereign levels, which were revised on Aug. 25.

The rationale for the upgrade for the twin state banks were identical: strengthening profitability and capital adequacy; their “adequate liquidity positions”; as well as their high inter-linkage with sovereign fundamentals.

Alexander Paraschiy: This is what we expected to happen after Moody’s upgrade of Ukraine's sovereign rating. The ratings revision confirms our view that both banks have identical credit and sovereign risk and thus deserve to be traded on par with sovereign bonds. Therefore, we remain bullish about all the senior Eurobonds of these banks, which trade at a 1.3-1.4pp spread to sovereign curve.
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