Moody's rates Locko-bank notes B2

Moody's Investors Service said it assigned a rating of B2 to the loan participation notes to be issued on a limited recourse basis by Locko Finance plc for the sole purpose of funding a loan to Locko-bank.

The outlook is stable.

Holders of the notes will be relying for repayment solely and exclusively on the ability of Locko-bank to make payments under the loan agreement. Locko-bank is currently rated B2/not-prime for long- and short-term foreign- and local-currency deposits and E+ for financial strength. Moody's said the amount and tenor of the notes have yet to be determined.

The obligations of Locko-bank to make payments under the loan agreement will rank at all times at least pari-passu with the claims of all other unsecured creditors of the borrower, except for those whose claims are preferred by any laws.

Moody's noted that Russia is, in general, a country with individual depositor preference, which may reduce the recovery rates for the bondholders, especially if such deposits were to represent a sizeable proportion of the bank's liabilities in the event of liquidation.

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