International Rating Agency Fitch Ratings has upgraded
Support Rating Floor was affirmed at 'No Floor' and withdrawn.
Senior unsecured debt was upgraded to 'B-' from 'CCC' and maintained on RWP, Recovery Rating 'RR4'
"The upgrade of BTA's Long-term IDRs to 'B-' from 'CCC' reflects Fitch's opinion of the moderately improved support prospects for BTA as a result of KKB's acquisition of a 46.5 percent stake in the bank's ordinary share capital in
In Fitch's view, KKB is likely to have a high propensity to support BTA, if needed, given plans to integrate the two banks and our expectation that BTA will be consolidated in KKB's IFRS accounts and qualify as a material subsidiary under the cross-default clauses in KKB's Eurobonds. The one-notch difference between KKB's and BTA's ratings reflect BTA's still weak balance sheet and its large size, relative to KKB, which may in certain circumstances constrain the propensity and ability of KKB to provide support.
The affirmation of BTA's Viability Rating (VR) at 'ccc' reflects the limited recent changes in the bank's standalone credit profile, which remains constrained by weak asset quality, capitalisation and performance. Upside potential for the rating is limited given the deep-seated nature of the bank's problems.
KKB's ratings reflect the bank's weak asset quality and the potential need for further provisioning of its problem loans. However, the ratings also consider KKB's positive pre-impairment profit (net of accrued interest), moderate refinancing and liquidity risks, and the track record of significant debt repayments in a challenging environment.
In Fitch's view, risks and uncertainties relating to the BTA acquisition, and the reduction in capital ratios resulting from an ongoing share buyback, are both moderately negative for KKB's credit profile. However, these risks are consistent with the bank's ratings.
The RWP on BTA's Long-term IDRs and senior debt rating reflects the potential for these ratings to be upgraded to 'B' as a result of closer integration between KKB and BTA.
KKB's '5' Support Rating and 'B-' Support Rating Floor (SRF) reflect Fitch's view of the limited probability of support from the Kazakh authorities given recent defaults of other large Kazakh banks. In light of the weak track record of support, there is limited upside for these ratings. BTA's Support Rating '5' has been placed on RWP to reflect the potential for closer integration between KKB and BTA. In line with its criteria, Fitch has withdrawn BTA's SRF as it now views institutional (shareholder) support as the more likely source of external support for the banks.
The ratings of both banks' senior unsecured debt issues are equalised with their respective Long-term IDRs and would likely change in tandem with these ratings. KKB's subordinated debt and perpetual debt issues are notched off the bank's
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