Moody's rates Alfa Bank Ukraine note B1

Moody's Investors Service said it assigned a B1 rating to the loan participation notes to be issued on a limited recourse basis by Emerging Market Structured Products BV for the sole purpose of funding a loan from VTB Bank Europe plc to Alfa Bank Ukraine. The volume and the tenor of the issue have yet to be determined.

The outlook for the rating is stable.

The agency said the B1 rating is based on the fundamental credit quality of Alfa Bank Ukraine as an underlying borrower, which has a B1 long-term local-currency deposit rating that was notched up from the standalone level based on implicit support the bank may receive from affiliated companies. The Ba2 deposit rating of Russia-based Alfa Bank was used as a proxy for evaluating the capacity to provide such support, although this bank may not necessarily be the supporting entity itself, Moody's added.

The loan to the bank is the only source of repayment of the notes and will rank at least pari passu with the claims of all Alfa Bank Ukraine's other unsecured creditors, save those whose claims are preferred by any bankruptcy, insolvency, liquidation or similar laws of general application.

Moody's cautioned that the transaction has an embedded rating trigger whereby the notes will become payable if Alfa Bank Ukraine's ratings are downgraded by one or more notches or are placed on review for possible downgrade during the three months after a change of control.

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