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Moody's upgrades International Bank of Azerbaijan's ratings

25 July 2017 19:28 (UTC +04:00)

Moody's has upgraded International Bank of Azerbaijan's (Ä°BA) raitings following creditors' agreement on its debt restructuring, concludes the review, APA reports quoting press service of Ä°BA.

The long-term foreign- and local-currency deposit ratings of International Bank of Azerbaijan (IBA) upgrated to Caa1 from Caa2 and the foreign-currency senior unsecured debt rating to Caa2 from Caa3.

IBA's Baseline Credit Assessment (BCA) was upgraded to caa3 from ca and the long-term counterparty risk assessment (CRA) to B3(cr) from Caa1(cr). The long-term deposit ratings carry a positive outlook, while the debt ratings carry a stable outlook. Not Prime short-term deposit ratings and Not Prime(cr) short-term CRA were affirmed.

In its statement, the agency said that the new ratings are based on the results of voting on the adoption of the restructuring plan, which were announced on July 18. Changes in the ratings indicate that Moody's positively regards the steps to improve the financial well-being of the Bank. According to the agency's forecasts, the implementation of the restructuring plan will strengthen financial stability, capital position and improve the quality of the Bank's assets. In addition to restructuring external liabilities, the transfer of the remaining distressed assets to AgrarCredit will also help improve the quality of bank assets.

According to Moody's experts, the transfer of troubled assets will be completed by the end of 2017. It is expected that the Bank's first-tier capital after the restructuring will exceed 13%. The debt portfolio of the International Bank of Azerbaijan will also significantly improve after the restructuring process is over.

According to the agency's forecasts, by the end of 2018, the IBA plans to demonstrate profits, which, to a large extent, will also depend on the macroeconomic situation in the country.

Moody's assesses the likelihood of government support for the Bank as high, due to 95% equity participation in the share capital, as well as a significant portion of the Bank's assets in the local market. In addition, it was separately noted that the restructuring of external obligations of the International Bank of Azerbaijan did not affect clients and deposit holders in any way. The statement also indicates that after the end of the restructuring process, Moody's will reconsider the IBA's ratings upward.