March 31, 2014 / 1:37 PM / 6 years ago

Fitch Downgrades Kazakhstan's Alliance Bank to 'RD'

(The following statement was released by the rating agency) MOSCOW/LONDON, March 31 (Fitch) Fitch Ratings has downgraded Kazakhstan's Alliance Bank JSC's Long-term Issuer Default Ratings (IDRs) to 'RD' (Restricted Default) from 'C' and Viability Rating (VR) to 'f' from 'c'. A full list of rating actions is at the end of this commentary. KEY RATING DRIVERS The downgrades reflect Fitch's view that the bank has experienced an uncured default on its senior debt obligations, following the failure to pay a coupon due on 25 March. Fitch understands that Alliance has no plans to make the outstanding payment during the 10-day grace period given the ruling of the financial court of Almaty on 3 March. This ruling authorised the restructuring of the bank's debt and ordered suspension of payments on these obligations. In January 2014, the bank stated its intention to materially reduce its liabilities under its senior and subordinated debt obligations relative to original contractual terms in order to improve its capitalisation. Fitch therefore expects that implementation of the restructuring will involve a material reduction of terms relative to the original contractual terms, which Fitch classifies as a restricted default in accordance with its "Distressed Debt Exchange Criteria" The affirmation of the senior and subordinated debt at 'C' reflects the fact that these were already at the lowest level possible for instrument ratings. RATING SENSITIVITIES Fitch expects to review Alliance's ratings following completion of the bank's restructuring. Any upgrades will depend on the extent to which the restructuring restores Alliance's viability, and in particular, solvency. The rating actions are as follows: Long-term foreign and local currency IDRs: downgraded to 'RD' from 'C' Short-term foreign and local currency IDRs: downgraded to 'RD' from 'C' Support Rating: affirmed at '5' Support Rating Floor: affirmed at 'No Floor' Viability Rating: downgraded to 'f' from 'c' Senior unsecured debt rating: affirmed at 'C'; Recovery Rating 'RR4' Subordinated debt rating: affirmed at 'C'; Recovery Rating 'RR6' Contact: Primary Analyst Roman Korev Director +7 495 956 7016 Fitch Ratings CIS Ltd 26 Valovaya Street Moscow 115054 Moscow Secondary Analyst Aslan Tavitov Associate Director +7 495 956 7065 Committee Chairperson Alexander Danilov Senior Director +7 495 956 2408 Media Relations: Julia Belskaya von Tell, Moscow, Tel: +7 495 956 9908, Email:; Hannah Huntly, London, Tel: +44 20 3530 1153, Email: Additional information is available on Applicable criteria, 'Global Financial Institutions Rating Criteria', dated 31 January 2014, 'Distressed Debt Exchange Criteria', dated 2 August 2013 and 'National Scale Rating Criteria', dated 30 October 2013, are available at Applicable Criteria and Related Research: Global Financial Institutions Rating Criteria here Distressed Debt Exchange here National Scale Ratings Criteria here Additional Disclosure Solicitation Status here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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