(The following statement was released by the rating agency)
MOSCOW/LONDON, June 03 (Fitch) Fitch Ratings has assigned Alfa
plc's (AHI) upcoming euro-denominated senior issue of limited
participation notes an expected 'BB+(EXP)' rating.
AHI, an Irish SPV issuing the bonds, will on-lend the proceeds
ABH Financial Limited (ABHFL, BB+/Negative), as the ultimate
borrower under the
The final rating is contingent on the receipt of final documents
information already provided.
KEY RATING DRIVERS
The issue's rating is driven by ABHFL's 'BB+' Long-term Issuer
(IDR). The issue will not be guaranteed by Alfa Bank
(BBB-/Negative), a main
operating subsidiary of ABHFL. However, there is a cross-default
clause in some
of Alfa Bank's public obligations triggered by a default of
ABHFL (with a
materiality threshold below the current issue size), which
incentive for the bank to ensure ABHFL meets its obligations.
ABHFL will use the proceeds from the issue mainly to refinance
liabilities and therefore it will not lead to an increase in the
The terms of the current issue contain a cross-default clause in
insolvency or default of Alfa Bank (with a materiality threshold
set above 3% of
ABHFL's consolidated equity, which was about USD145m at
end-2013). There is also
a covenant limiting disposals, whereby ABHFL should not cease to
least 50% of Alfa Bank.
The issue's rating (as well as that of ABHFL) is not capped by
Ceiling of 'B' due to the transaction's structure (and ABHFL's
having minimum exposure to the local operating risks.
The rating of the issue is likely to move in tandem with ABHFL's
which in turn is currently notched down once from that of Alfa
Negative Outlook on Alfa Bank's Long-term IDRs reflects the
potential for a
downgrade due to the possible weakening of the Russian operating
maintaining a one-notch difference between the bank's rating and
that of the
Russian sovereign (BBB/Negative).
If ABHFL significantly increases leverage, which is currently
not our base case
expectation, both ABHFL's and the issue ratings may be notched
further down from
Alfa Bank's rating.
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Additional information is available on www.fitchratings.com.
Applicable criteria, 'Global Financial Institutions Rating
Criteria' dated 31
January 2014, 'National Scale Ratings Criteria' dated 30 October
FI Subsidiaries and Holding Companies' dated 10 August 2012 and
Financial Institutions Above the Sovereign' dated 11 December
2012 are available
Applicable Criteria and Related Research:
Global Financial Institutions Rating Criteria
National Scale Ratings Criteria
Rating FI Subsidiaries and Holding Companies
Rating Financial Institutions Above the Sovereign
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