Fitch Downgrades Ukraine's PrivatBank to 'RD'

January 03, 2017 - Cbonds


30 December 2016: Fitch Ratings has downgraded PJSC CB PrivatBank's (Privat) Long-Term Foreign Currency Issuer Default Rating (IDR) to 'RD' (Restricted Default) from 'CCC' and removed it from Rating Watch Evolving (RWE). The Long-Term Local Currency IDR is unaffected by this rating action. A full list of rating actions is at the end of this rating action commentary.

The downgrade of Privat's Long- and Short-Term Foreign Currency IDRs and debt ratings follows the recent announcement by the National Bank of Ukraine that third party senior unsecured and subordinated creditors of the bank have been bailed in as a part of the bank's recapitalisation process. The bail-in was executed before the bank was nationalised on 21 December 2016. Fitch understands from the bank that all the proceeds due under the senior unsecured Eurobonds, as well as some other senior unsecured debt, have been used for recapitalisation of the bank.

The senior unsecured debt ratings have been downgraded to 'C'/RR6, the lowest possible level, and withdrawn as the securities have been cancelled. Fitch did not rate the bank's subordinated obligations.

The affirmation of the Support Rating at '5' and the Support Rating Floor at 'No Floor' reflect (i) that government support has been insufficient to avert losses for senior creditors, and (ii) in Fitch's view such support cannot be relied upon in future. The latter view in turn reflects (i) the non-strategic nature of the state ownership of Privat and (iii) the limited ability of the authorities to provide foreign currency support in case of need.

The Long-Term Local Currency IDR and the National Rating have not been affected by these rating actions as Fitch currently has insufficient information to determine whether the bail-in of creditors has affected third-party senior unsecured local currency obligations.

The 'f' Viability Rating has not been affected by these rating actions as the bank's recapitalisation has not been completed and, post bail-in, the capital shortfall remains large (estimated at 4.3x end-3Q16 regulatory capital).

The Long-Term Local Currency IDR and the National Rating will be downgraded to 'RD' if Fitch receives information that third-party senior local currency obligations have also been bailed in as part of the recapitalisation exercise.

Fitch expects to review and upgrade the bank's Foreign Currency IDRs and Viability Rating once sufficient information is available on the bank's post-recapitalisation credit profile.
Issuer, issue numberPrivatBank, 11% 9feb2021, USD
Type of debt instrumentInternational bonds
Issue statusoutstanding
Type of placementPublic
Par, currency of issueUSD 100,000
End of placement11/17/2015
Coupon frequency2 time(s) per year
Settlement date11/17/2015
Maturity date02/09/2021
Issue ManagersBookrunner: Exch/Restr.
Issuer: PrivatBank
Outstanding issues:
3 issuesUSD595,000,000
5 issuesUAH100,000,000
Issuer rating:
UCRAWithdrawn/National Rating Scale08/01/2013
Standart-RatinguaAA/StableNational Scale (Ukraine)12/29/2016
Moody's Investors ServiceCaa3/PositiveLT- foreign currency08/30/2017
Moody's Investors ServiceCaa2/PositiveLT- local currency08/30/2017
Moody's Investors Scale (Ukraine)09/25/2013
S&P Global RatingsCCC+/StableForeign Currency LT04/26/2017
S&P Global RatingsCCC+/StableLocal Currency LT04/26/2017
Fitch RatingsRD/LT Int. Scale (foreign curr.)12/30/2016
Fitch RatingsCCC/LT Int. Scale (local curr.)12/20/2016
Fitch RatingsBB(ukr)/National Scale (Ukraine)12/20/2016
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issues: local and international bonds
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150 000
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