Fitch Rates Krayinvestbank's Upcoming Bond Issue 'B+(EXP)'
August 30, 2013 Fitch Ratings
Fitch Ratings has assigned Krayinvestbank's (KIB) upcoming RUB2bn BO-03 Series domestic bond issue an expected Long-term local currency rating of 'B+(EXP)' and a National Long-term rating of 'A-(rus)(EXP)'. The bond's expected Recovery Rating is 'RR4(EXP)'.
The bonds have a maturity of six years, a semi-annual coupon and a 1.5 year put option.
KIB has a Long-term foreign currency Issuer Default Rating (IDR) of 'B+' with Stable Outlook, a Short-term IDR of 'B', a Long-term local currency IDR of 'B+' with Stable Outlook, a National Rating of 'A-(rus)' with Stable Outlook, a Viability Rating of 'b-' and Support Rating of '4' .
KEY RATING DRIVERS
The issue ratings correspond to KIB's 'B+' Long-term local currency IDR, which reflects the limited probability of support that KIB may receive if needed from Krasnodar Region (KR, BB+/Stable), which directly owns a 98.04% stake in the bank. Fitch's view of the propensity to provide support is based on KR's majority ownership and a track record of assistance to date. However, Fitch considers there is some uncertainty in respect of support in light of the bank's limited systemic importance for the region and some corporate governance issues.
Any changes to KIB's Long-term local currency IDR would impact the issue ratings. Downside pressure on KIB's Long-term foreign and local currency IDR could arise from any major weakening in the relationship between KR and the bank, for example, as a result of changes in key senior regional officials. Upside potential for KIB's Long-term local currency IDR is limited in the near term, but a reduction in construction exposure which may be largely related to KR and its officials would be credit positive.
Issue — Krayinvestbank, BO-03
Country of riskRussia
Redemption (put/call option)
М/S&P/F— / — / —
Company — Krayinvestbank