27 April 2004 14:02
S&P RATES VNESHTORGBANK `BB+/B`, OUTLOOK STABLE
The outlook is stable.
Standard & Poor's also assigned its 'BB+' long-term senior
unsecured debt rating to VTB's existing $2 billion program for the
MOSCOW. April 27 (Interfax) - Standard & Poor's Ratings assigned its 'BB+' long-term and
'B' short-term counterparty credit and certificate of deposit ratings to Russia's Vneshtorgbank (Bank for
Foreign Trade, VTB), the rating agency said in a press release.
issuance of loan participation notes. The notes are issued by, but with limited recourse to, Luxembourg-based VTB
Capital S.A., for the purpose of financing fiduciary deposits with Deutsche Bank Luxembourg S.A. (AA- /Stable/A-1+) for
the purpose of financing loans to VTB.
The program is set up with a trustee, Citicorp Trustee Co. Ltd., which holds the rights to collect the outstanding
debt from the issuer for the benefit of the debtholders. The rating on the program reflects the capacity and willingness
of VTB to honor its financial obligations, and thus reflects the counterparty credit ratings on VTB, rather than the
legal structure of the program.
"The ratings on VTB reflect the bank's state ownership and the important role it plays in the foreign trade
finance-related corporate sector in Russia, as well as VTB's good capitalization and adequate financial
profile," said Standard & Poor's credit analyst Ekaterina Trofimova. "These strengths are offset,
however, by the still-risky banking and economic environment in Russia, the challenges of adopting an ambitious
expansion and diversification strategy, and the bank's high- -albeit decreasing--lending concentrations."
The main driver of the bank's future creditworthiness will be the evolution of the economic environment in
Russia, which remains buoyant to date. VTB has good potential to improve its core revenue generation, particularly if it
can successfully reap the benefits of its business expansion and diversification strategy. These factors should smooth
out the earnings volatility relating to VTB's still-high dependence on trading gains.
Conversely, the ratings or outlook on VTB could come under pressure if core performance trends deteriorate and
adverse risks accumulate through rapid loan growth, should the macroeconomic situation deteriorate. The bank's
ambitious growth plans in a continually high- risk economy are also challenging, and will place downward pressure on the
bank's capitalization going forward.
[Interfax] |
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