ACRA assigns eA(RU) to (10 series LPN, actual issuer: Alfa Bond Issuance Plc) subordinated eurobonds issued by JSC “ALFA-BANK”

Expected credit rating rationale. Alfa Bond Issuance Plc, an Irish SPV, plans to place an LPN issue and provide proceeds from the issue in full as a subordinated loan to JSC “ALFA-BANK” (hereinafter — Alfa-Bank, or the Bank). In our opinion, the terms of the issue comply with the requirements of the Bank of Russia Regulation No. 646-P for its inclusion into additional Tier-2 capital sources. The above loan will be included into capital of the Bank after its disbursement and receipt of the respective approval from the Bank of Russia.

The issue is a subordinated debt of the Bank with respect to senior unsecured creditors. The terms of the issue provide for a complete write-off of the loan and a cancellation of eurobond earnings should any of the below events occur: 1) N1.1 ratio goes below 2% for six or more business days during a continuous period of 30 business days; 2) the Board of Directors of the Bank of Russia approves a plan for the latter’s participation in the implementation of bankruptcy prevention measures with respect to the Bank, or the Committee on Banking Supervision of the Bank of Russia approves a plan for the Deposit Insurance Agency’s participation in the implementation of bankruptcy prevention measures with respect to the Bank. According to ACRA’s methodology, the final credit rating of this issue type has to be three notches below the final credit rating of the Bank (AA(RU)).

The credit rating of Alfa-Bank is based on its strong business profile, adequate capital reserves, adequate liquidity and funding position, and satisfactory risk profile. The rating is further supported by the Bank’s moderate systemic importance for the Russian financial market.

Key issue properties

Borrower

JSC “ALFA-BANK”

Borrower’s credit rating

AА(RU), outlook Stable

Actual issuer

Alfa Bond Issuance Plc

Type of security

Subordinated eurobonds (LPN)

Maturity

5+ years

Regulatory disclosure

ACRA will assign a credit rating to the issue of Eurobonds (10 series LPN, actual issuer: Alfa Bond Issuance Plc) after receiving the final documentation. In case of any significant discrepancies between the final documentation and the preliminary materials, ACRA may change the issue credit rating against the expected credit rating.

The expected credit rating has been assigned to the issue of Eurobonds (10 series LPN, actual issuer: Alfa Bond Issuance Plc) under the national scale for the Russian Federation based on the Methodology for Assigning Credit Ratings to Individual Issues of Financial Instruments under the National Scale of the Russian Federation, and the Key Concepts Used by Analytical Credit Rating Agency within the Scope of Its Rating Activities.

The expected credit rating has been assigned to Eurobonds (actual issuer: Alfa Bond Issuance Plc; 10 series LPN, actual issuer: Alfa Bond Issuance Plc) issued by JSC “ALFA-BANK” for the first time. ACRA expects to assign the final credit rating within 90 days following the publication date of this press release.

The expected credit rating is based on data provided by JSC “ALFA-BANK”, information from publicly available sources, and ACRA’s own databases. The expected credit rating is solicited, and JSC “ALFA-BANK” participated in its assignment.  

No material discrepancies between the provided data and data officially disclosed by JSC “ALFA-BANK” in its financial statements have been discovered.

ACRA provided additional services to JSC “ALFA-BANK”. No conflicts of interest were discovered in the course of the expected credit rating assignment.

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