Moody's drops Raiffeisenbank (Bulgaria)

Moody's Investors Service said it downgraded Raiffeisenbank (Bulgaria)'s long-term local and foreign-currency deposit ratings to Ba2 from Ba1 and the standalone bank financial strength rating to E+, mapping to a baseline credit assessment of b1, from D-/ba3.

The outlook on the long-term deposit ratings was changed to negative from stable. The short-term deposit ratings of Not-Prime remained unaffected.

Moody's said the action is primarily driven by: (a) Raiffeisenbank's weakening asset quality, owing to legacy exposures to the construction and real estate sector, which continue to perform poorly, and its growing delinquencies in the broader loan portfolio within the context of Bulgaria's challenging operating environment; and (b) subsequent pressure on the bank's profitability - stemming from the non-performing status of a part of the real estate portfolio and of the other problematic exposures - which in turn weaken the bank's interest income and raise provisioning needs.

Offsetting factors are the bank's comfortable capital and liquidity buffers, the agency said.

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