AO Alliance Bank, Kazakhstan’s largest consumer lender, had its rating downgraded five levels at Moody’s Investors Service on concern the bank will default on its debt. Trading of its securities in London was halted.
The rating on the bank’s foreign-currency senior unsecured debt was cut to Ca, the second-lowest non-investment grade, according to a statement from Moody’s. Trading was suspended “pending clarification” of the bank’s finances, the Financial Services Authority said.
The downgrade “reflects the increasing likelihood of default and debt restructuring of the bank’s liabilities stemming from the ongoing deterioration in the financial strength,” Semyon Isakov, a Moscow-based analyst at Moody’s, wrote in the statement.
Debt amounting to two-thirds of the bank’s funding base faces “accelerated repayment” because of so-called “early amortization clauses” and the expected nationalization of the bank through Kazakhstan’s National Wellbeing Fund Samruk-Kazyna, Moody’s said. Government support for the payments is “unlikely to be forthcoming,” the ratings company said.
Alliance’s securities portfolio may be “seriously impaired” and the bank plans to record a writedown because of an overstatement of its assets, the company said today.
The bank’s global depositary receipts, which have slumped 98 percent in the past year, were unchanged at 9 cents before trading was stopped.
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