Kazakhstan-Based Delta Bank Ratings Kept At ‘D’ As Bank’s Default On Depositor Obligations Continues

Kazakhstan-Based Delta Bank Ratings Kept At 'D' As Bank's Default On Depositor Obligations Continues

The international rating agency S&P Global Ratings had affirmed its ‘D/D’ long- and short-term issuer credit ratings on Kazakhstan-based Delta Bank, the rating agency said in a message. At the same time, the agency affirmed the ‘D’ Kazakhstan national scale rating. S&P also affirmed its ‘D’ issue-level ratings on its senior unsecured bonds.

“The affirmation of the ratings reflects Delta Bank’s failure to repay some term deposits that were due in February and March 2017,” S&P said.

The rating agency noted that although Delta Bank fully repaid (on Feb. 22, 2017) 9.9 billion tenges (about $30 million) domestic senior unsecured bond it had defaulted on Feb. 14, 2017, and also prepaid some other obligations, its liquidity position remains under pressure. These repayments were possible due to a 45.6 billion tenges loan the National Bank of Kazakhstan (NBK) provided to the bank for one month, which was then rolled over for another month. However, Delta Bank failed to pay approximately 10 billion tenges in corporate deposits due in February and March.

According to S&P, Delta Bank’s current liquid assets of about 6 billion tenges (about 1.5 percent of total assets) as of March 30, 2017, are not sufficient to enable the bank to meet upcoming debt payments due. In April 2017, the bank needs to repay the loan from the NBK and liabilities under repurchase agreement transactions.

S&P will reassess Delta Bank’s creditworthiness and, if the bank fully repays all its overdue obligations and the agency has evidence that the bank has sufficient liquidity to meet its short and medium term payments, it will raise the ratings from ‘D’.