Fitch downgrades BTA Bank and subsidiary of Joint stock company BTA Bank-Temirbank (Kazakhstan)
25.03.09 09:35
/Fitch Ratings, London-Moscow, March 24, 09, KASE headline/ - Fitch
Ratings-London/Moscow-24 March 2009: Fitch Ratings has today
downgraded Kazakhstan-based BTA Bank's (BTA) and subsidiary
Temirbank's (Temir) Long-term foreign currency Issuer Default Ratings
(IDRs) to 'CC' from 'B+'. The ratings remain on Rating Watch Negative
(RWN). A full list of rating actions is provided at the end of this commentary.
The downgrades reflect Fitch's view that a default by the banks on at least
some of their financial obligations is now probable. This follows BTA's
announcement on 17 March 2009 which made reference to consideration of
"potential modifications to the BTA Group's debt structure" and stated that "in
the event any financial indebtedness to the BTA Group is accelerated prior to
its stated maturity, Samruk-Kazyna (the bank's majority shareholder) may no
longer be prepared to provide ... support" to BTA Group."
Fitch notes that, in accordance with its coercive debt exchange (CDE)
criteria, a CDE is deemed to have occurred if the terms of an entity's financial
obligations are materially reduced relative to their original contractual terms,
and such a reduction occurs as a result of an exchange which is coercive or
de facto necessary, even if technically voluntary. Execution of a CDE will
result in an entity being downgraded to 'D' (default) or 'RD' (restricted
default).
In Fitch's view, there is a heightened risk further to the recent announcement
that a material proportion of BTA's and Temir's liabilities will be subject to a
CDE. Fitch also notes the apparently high probability that BTA will not repay
certain financial obligations in accordance with their accelerated schedules,
or will force creditors to waive acceleration rights. The execution of a CDE in
respect to a material proportion of BTA's or Temir's liabilities would cause
Fitch to resolve the RWN by downgrading the respective bank to 'RD' or 'D'.
As far as Fitch is aware, both BTA and Temir at present remain current on
their non-accelerated financial obligations. However, it has not been possible
for Fitch to ascertain to what extent creditors have already sought to
accelerate any of the banks' financial obligations, or to assess what
proportion of the banks' liabilities have acceleration clauses which might
have been triggered by Samruk-Kazyna's recent acquisition of a majority
stake in BTA.
Rating actions are as follows:
BTA Bank
Long-term foreign currency IDR: downgraded to 'CC' from 'B+'; remains on
RWN
Long-term local currency IDR: downgraded to 'CC' from 'B+'; remains on
RWN
Short-term foreign currency IDR: downgraded to 'C' from 'B', remains on
RWN
Short-term local currency IDR: downgraded to 'C' from 'B', remains on RWN
Individual Rating: affirmed at 'F'
Support Rating: downgraded to '5' from '4'; removed from RWN
Support Rating Floor: revised to 'No Floor' from 'B+', removed from RWN
Senior unsecured debt: downgraded to 'CC' from 'B+', remains on RWN,
Recovery Rating remains at 'RR4'
Tier 1 perpetual preferred securities: downgraded to 'C' from 'CCC', remains
on RWN, Recovery Rating remains at 'RR6'
Temirbank
Long-term foreign currency IDR: downgraded to 'CC' from 'B+'; remains on
RWN
Short-term foreign currency IDR: downgraded to 'C' from 'B', remains on
RWN
Individual Rating: affirmed at 'E'
Support Rating: downgraded to '5' from '4', removed from RWN
Support Rating Floor: revised to 'No Floor' from 'B+', removed from RWN
Senior unsecured debt: downgraded to 'CC' from 'B+; remains on RWN;
Recovery Rating remains at 'RR4'
Contacts:
Maxim Miller, James Watson, Moscow, tel.: +7 495 956 9901
Media Relations:
Alexsei Mironov, Moscow, tel.: +7 495 956 9901/9908,
alexei.mironov@fitchratings.com
Marina Moshkina, Moscow, tel.: +7 495 956 6904/9901,
marina.moshkina@fitchratings.com
[2009-03-25]