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Sep 12, 2023 11:13 EEST
September 12 (SeeNews) - Fitch Ratings said it assigned an initial long-term rating of 'B(EXP)' and a Recovery Rating of 'RR4' to the upcoming inaugural senior preferred (SP) note offering, with the final rating subject to final documents conforming to the information already received by the agency.
The planned bond offering is expected to be euro-denominated and listed on Luxembourg Stock Exchange, the credit ratings agency said in a statement on Monday.
You can download the 2022 ESG & Sustainability report Bulgaria here
Fibank later announced that it has started assessing investor interest with a view to issuing a green bond worth 300 million euro ($321.6 million).
Fitch Ratings also said:
"KEY RATING DRIVERS
FIBank's SP debt is rated in line with the bank's Long-Term Issuer Default Rating (IDR). Fitch typically rates long-term SP debt in line with the Long-Term IDR where we expect an issuer to use SP debt to meet its resolution buffer, and where senior non-preferred debt (SNP) and more junior debt buffers are not expected to exceed 10% of risk-weighted assets (RWAs) on a sustained basis. The SP debt Recovery Rating reflects Fitch's expectation of average recoveries in a default.
The planned SP notes will constitute a direct, unconditional, unsubordinated and unsecured obligation of FIBank and rank equally with all its other senior preferred obligations.
FIBank must comply with resolution requirements set under the minimum requirements for own funds and eligible liabilities (MREL). The bank's fully loaded MREL requirements is 36.41% of RWAs (including combined buffer requirement), valid from January 2024.
FIBank's IDRs are driven by its intrinsic strength as reflected in the bank's Viability Rating (VR) of 'b'. FIBank's Long Term IDR and VR are constrained by its high stock of impaired loans and non-loan problem assets, which weigh on its profitability and encumber its capital given modest provisioning. These factors weigh on the bank's business model. The ratings also balance a reasonable domestic franchise and adequate funding and liquidity profiles. For more details see 'Fitch Affirms Bulgarian FIBank's IDR at 'B'; Outlook Stable' published on 8 June 2023 and available at www.fitchratings.com.
FIBank's common equity Tier 1 ratio stood at 17.5% at end-1H23. The bank's capital structure is supplemented by about BGN266 million of outstanding euro-denominated hybrid debt (additional Tier 1) and BGN19.4 million of outstanding euro-denominated subordinated debt (Tier 2), bringing the total capital ratio to 20.97% at end-1H23. The bank's liability structure is dominated by customer deposits (about 96% of total funding at end-1H23), with household deposits accounting for 69% of total customer deposits. The bank's liquidity coverage ratio was 270% and the net stable funding ratio was 147% at end-1H23.
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
FIBank's long-term SP rating would be downgraded if the bank's Long-Term IDR is downgraded.
Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
FIBank's long-term SP rating would be upgraded if the bank's Long-Term IDR is upgraded
FIBank's long-term SP rating could also be upgraded if its resolution requirements or its plan to meet them changes so that SNP or more junior debt exceeds 10% of RWAs on a sustained basis and the burden of the bank's weakly provisioned problem assets significantly decreases.
The highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit neutral or have only a minimal credit impact on FIBank, either due to their nature or the way in which they are being managed by the bank. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation of the materiality and relevance of ESG factors in the rating decision. For more information on Fitch's ESG Relevance Scores, visit www.fitchratings.com/esg.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria."
($ = 0.9329 euro)
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