June 25, 2014 / 1:01 PM / 3 years ago

RPT-Fitch Rates Sberbank of Russia's EUR1bn Eurobonds 'BBB'

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June 25 (Reuters) - (The following statement was released by the rating agency)

Fitch Ratings has assigned Sberbank of Russia’s EUR1bn Eurobond issue a ‘BBB’ Long-term rating. The notes were issued by Luxembourg-based SPV SB Capital S.A. under Sberbank’s USD30bn loan participation notes programme, which Fitch rates at Long-term ‘BBB’ and Short-term ‘F3’.

The notes are due in November 2019 and have a fixed 3.3524% coupon paid annually. Sberbank’s obligations under the notes will rank equally with the claims of other senior unsecured creditors, except the claims of retail depositors. Under Russian law, the claims of retail depositors rank above those of other senior unsecured creditors. At end-5M14, retail deposits accounted for 51.1% of Sberbank’s total liabilities, according to the bank’s unconsolidated financial statements under local accounting standards.

KEY RATING DRIVERS

The issue’s rating corresponds to Sberbank’s Long-term foreign currency Issuer Default Rating (IDR, ‘BBB’/Negative). Sberbank’s IDRs are underpinned by Fitch’s view of a very high probability of support from the Russian authorities, in case of need and by the bank’s standalone strength, reflected in its ‘bbb’ Viability Rating (VR). The Negative Outlook on Sberbank’s ratings is driven by the Negative Outlook on Russia’s sovereign IDRs (see ’ Fitch Revises Russia’s Outlook to Negative; Affirms at ‘BBB’ ', dated 21 March 2014 at www.fitchratings.com).

RATING SENSITIVITIES

Any changes to Sberbank’s Long-term foreign currency IDR would also impact the issue’s rating. Sberbank’s IDRs could be downgraded in case of a sovereign downgrade and a significant weakening of the operating environment. A revision of the sovereign Outlook to Stable would lead to the Outlooks on Sberbank’s ratings being revised back to Stable.

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