Moody's cuts Alfa Bank Ukraine

Moody's Investors Service said it downgraded Alfa Bank Ukraine's local- and foreign-currency deposit and senior unsecured debt ratings to Caa1 from B3, bank financial strength rating to E from E+ and national-scale rating to Ba3.ua from Baa3.ua. All of the bank's long-term ratings remain on review for possible further downgrade.

The downgrade follows Alfa Bank Ukraine's recent offer to exchange its outstanding eurobonds maturing and/or putable in 2009, 2010 and 2011 with new longer-dated bonds that pay a higher coupon, Moody's said.

A successful completion of the debt exchange may benefit the bank's liquidity position and its franchise perspectives and result in affirming the bank's ratings, the agency said.

Conversely, if the exchange is rejected by the noteholders, this may increase the likelihood of default on Alfa Bank Ukraine's upcoming debt payments, Moody's said, and lead to a further downgrade.

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