Moody’s assigns provisional ratings to Kaspi Bank (Kazakhstan) bonds

June 28. KASE

Moody's assigns provisional ratings to Kaspi Bank (Kazakhstan) bondsMoody’s Investors Service has today assigned a provisional (P)B1 long-term local currency senior unsecured debt rating to the senior unsecured issuances under the KZT100 billion (approximately USD676 million) domestic bond programme of Kaspi Bank. Any subsequent senior unsecured debt issuance by Kaspi Bank will be rated at the same rating level subject to there being no material change in the bank’s overall credit rating.

Moody’s also assigned a provisional (P)B2 long-term local currency subordinated debt rating to the subordinated debt issuances under the same programme. Any subsequent subordinated debt issuance by Kaspi Bank will be rated at the same rating level subject to there being no material change in the bank’s overall credit rating.

The outlook on Kaspi Bank’s local currency debt ratings is negative, in line with negative outlook on the bank’s local currency deposit rating.

RATINGS RATIONALE

The provisional senior unsecured debt rating assigned to Kaspi Bank is in line with its B1 global local currency bank deposit rating. Moody’s notes that the obligations of Kaspi Bank to make payments under the senior unsecured bond issue will rank – at all times – at least pari-passu with the claims of all other unsecured and unsubordinated creditors of the bank, except for those claims that are preferred by any relevant law.

Moody’s notes that the (P)B2 subordinated debt rating, which is one notch below Kaspi Bank’s deposit rating, takes into account the extent of the bonds’ subordination to senior classes of debt.

Nonetheless, the ratings of Kaspi Bank’s domestic bond programme do not immediately apply to any individual notes issued under the programme. The assignment of any such ratings is subject to Moody’s satisfactory review of the terms and conditions set forth in the final prospectuses, supplements or offering memorandums of the bonds to be issued.

“The negative outlook on Kaspi Bank’s debt and deposit ratings reflects continued pressure on the bank’s credit profile from Kazakhstan’s sustained tough credit conditions and from the bank’s fundamental challenges in growing its retail lending business,” explains Maxim Bogdashkin, a Moody’s Assistant Vice President and lead analyst for the bank. “The bank’s credit quality may face pressure from any of the following developments: (i) a failure to maintain capital ratios adequate to risks stemming from its growing retail lending business; (ii) a failure to reduce depositor concentration, which renders the bank vulnerable to its relationships with the largest customers; or (iii) a failure to reduce concentration in its loan portfolio,” adds Mr. Bogdashkin.

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