Moody’s affirms Privatbank rating, upgrades MHP, state banks

Moody's Investors Service reported on Nov. 25 it upgraded the ratings of the unsecured foreign currency debt of state Oschadbank (OSCHAD) and Ukreximbank (EXIMUK) to Caa3 with a stable outlook (from Ca with a negative outlook). The ratings upgrade reflected the recent upgrade of Ukraine’s sovereign Eurobond ratings to Caa3, the successful restructuring of the banks’ Eurobonds and their “adequate liquidity positions,” the agency said.

In the same statement, Moody’s affirmed a Ca rating for Privatbank’s (PRBANK) unsecured foreign currency debt and a C rating for its subordinated foreign currency debt. Moody’s expects that “the bank’s reliance on liquidity and funding support from the National Bank of Ukraine will remain high” and sees its capital adequacy will be under pressure due to a high risk of rising loan-loss charges. The agency highlights that Privatbank has relatively low coverage of problem loans, of around 35%.

A day before, Moody’s upgraded the long-term credit rating of Ukraine’s largest poultry producer MHP to Caa2 from Caa3, which is by one notch higher than the sovereign rating. The agency referred to MHP’s strong operating performance and moderate conservative financial policy.

Alexander Paraschiy: The rating upgrades are of little surprise for Oschadbank and Ukreximbank, which are treated as quasi-sovereign bond issuers and usually have the same credit rating as the government.

We also fully agree with Moody’s assessment of rating for MHP which remains the brightest spot on Ukraine’s Eurobond universe. Even though its financial leverage ratio slightly worsened to 2.3x as of end-9M15, it remains safely above its covenants. Recall, MHP is the only Eurobond issuer that didn’t have to restructure its bond in 2014-2015.

We also agree that Privatbank’s Eurobonds are more risky than those of the state banks. Privatbank was able to secure the restructuring of USD 350 mln of its Eurobonds and attract a shareholder’s loan for USD 70 mln, which clearly solves its foreign currency liquidity issue. At the same time, that helps little to solve its capital issue, as was highlighted by Moody’s.

Источник: Конкорд Капитал