Fitch rates Alfa-Bank notes B

Fitch Ratings said it assigned an expected long-term rating of B to Alfa Bond Issuance plc’s upcoming issue of perpetual additional tier 1 (AT1) notes.

Alfa Bond, a special purpose vehicle, will be on-lending the proceeds in form of a perpetual subordinated loan to JSC Alfa-Bank.

The AT1 perpetual notes are rated four notches lower than the bank’s BB+ viability rating, the maximum rating under the agency’s criteria for deeply subordinated notes with fully discretionary coupon omission issued by banks with a viability rating anchor of BB+, Fitch explained.

The notching comprises two notches for higher loss severity relative to senior unsecured creditors and a further two notches for non-performance risk as Alfa-Bank has an option to cancel at its discretion the coupon payments, the agency said.

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