Fitch Ratings international rating agency has assigned Russia-based IBA-Moscow Bank's (IBAM) three billion roubles' issue of fixed-rate rouble-denominated bonds a final long-term rating of 'BB', the message of the agency said.
The bonds have a tenor of three years with a put option in one year. The coupon for the first year has been set at 11.5 percent.
The proceeds from the issue are being used solely for IBAM's corporate purposes, according to the agency. Should IBAM fail to make a coupon or principal payment under the terms of the bonds, bondholders will benefit from a public irrevocable offer (PIO) that would allow them to sell the bonds to the International Bank of Azerbaijan (IBA).
The issue's rating is equalized with IBA's long-term foreign-currency Issuer Default Rating (IDR), reflecting Fitch's view that default risk on the bonds and on IBA's other senior unsecured obligations is essentially the same.
IBA's long-term IDR in turn reflects Fitch's view of a moderate probability of support for the bank, if needed, from the Azerbaijan sovereign (BB+/Negative).
This view factors in IBA's high systemic importance, stemming from the bank's dominant market shares and substantial funding from state-owned entities; the bank's majority state ownership; IBA's moderate size relative to the sovereign's available resources; the potentially significant reputational damage for the authorities in case of IBA's default; and the recently improved track record of support.
IBA-MOSCOW bank (a general license No 3395 of the Bank of Russia) was founded in 2002. It is a subsidiary of OJSC International Bank of Azerbaijan.