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Moody's assigned Ba1 /NP (on review for upgrade) local currency deposit rating, Aa1.ua national scale rating to Ukrsotsbank (Ukraine); assigned Ba1 / Aa1.ua (on review for upgrade) ratings to Ukrsotsbank's upcoming domestic bond issue

January 09, 2007 | Cbonds

London, 03 January 2007 -- Moody's today assigned the following ratings to Ukrsotsbank (Ukraine):

- Ba1 long-term local currency deposit rating (on review for possible upgrade)

- Not Prime short-term local currency deposit rating (on review for possible upgrade)

- Aa1.ua long-term national scale rating (on review for possible upgrade)

According to Moody's, the Ba1/NP global scale local currency ratings reflect global default and loss expectation and is not constrained by any foreign currency transfer risk, while the Aa1.ua national scale rating reflects the standing of the bank's credit quality relative to its domestic peers.

The ratings reflect the bank's strong market positioning as Ukraine's fifth-largest bank by total assets, its extensive territorial coverage, growing emphasis on retail lending, strengthening financial fundamentals and improving asset quality. The ratings also incorporate difficulties associated with potentially volatile economic and political environment in Ukraine, significant - albeit improving - single-party concentrations on both sides of the balance sheet, the unseasoned nature of the bank's rapidly growing retail portfolio and tightening liquidity.
The ratings are on review for possible upgrade as Italian Banca Intesa is in the process of acquiring the controlling stake in Ukrsotsbank.

In addition to these ratings, Ukrsotsbank already has the following ratings by Moody's:

- B2 long-term foreign currency deposit rating (Positive Outlook)

- Not prime short-term foreign currency deposit rating

- Ba1 senior unsecured domestic currency debt rating (on review for possible upgrade)

- D- Financial Strength Rating (Positive Outlook)

Moody's also assigned Ba1 (on review for upgrade) Global Scale Rating and Aa1.ua (on review for possible upgrade) National Scale rating (NSR) to the local currency (hryvnia-denominated) bonds to be issued by Ukrsotsbank which will represent a senior unsecured claim on the bank. The ratings do not reflect any transfer risk and are therefore neither constrained by the B2 (positive outlook) foreign currency deposit ceiling for Ukraine, nor directly comparable with the published foreign currency ratings of other Ukrainian financial institutions.

The planned debt issue size is UAH 500 million (approx. US$100 million), distributing quarterly coupons with an issue date of 19 February 2007 and redemption date of 13 February 2012. The obligations associated with this debt issue include put options that the bondholders will, according to the terms of the issue, be able to exercise in order to sell the bonds back to the bank at par on the sixth and fourteens coupon payment dates and during the three working days following these dates. Moody's notes that if the bank's credit quality were to have deteriorated at these times, exercise of the put options might exert additional pressure on the bank's financial condition.

Company: Ukrsotsbank

Full company nameUkrsotsbank PJSC
Country of riskUkraine
Country of registrationUkraine
IndustryBanks

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