Fitch rates Alfa Bank Kazakhstan bonds B+

Fitch Ratings said it assigned an expected long-term local-currency rating of B+ to JSC SB Alfa Bank Kazakhstan's upcoming issue of 4.5 billion in Kazakh tenge series 3 senior unsecured bonds, along with an expected national long-term rating of BBB(kaz).

The recovery rating is RR4.

The series 3 bonds will be issued under the bank's bond program, likely in the first quarter of 2014.

The bonds will carry a fixed semi-annual coupon of 7% with no step-up and will have a maturity date in five years from the issue date. No put or call option is envisaged, Fitch said.

The bonds will rank pari passu with other senior unsecured obligations of the bank except for retail deposits, the agency said.

The final ratings are contingent on the receipt of final documents conforming to information already received.

The ratings are aligned with the bank's local-currency issuer default rating and national long-term rating, which are driven by the bank's viability rating of B+.

The ratings reflect the bank's small franchise, high single-name concentrations, significant growth in a moderately high risk environment and some uncertainty due to potential new bank acquisitions in Kazakhstan by the bank's shareholders, Fitch said.

The ratings also consider the bank's solid performance, which is helped by low average funding costs, reasonably strong reported asset-quality metrics, currently sound liquidity and funding position and solid capitalization, the agency said.

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