Moody's Changes Outlook on B2 of Azerbaijani Unibank

Business Materials 21 November 2008 17:10 (UTC +04:00)

Azerbaijan, Baku, 21 November / Trend corr. N.Ismayilova/ Moody's Investors Service has today changed the outlook on the B2 long-term foreign and local currency deposit ratings of Unibank to negative from positive, agency said.

According to Moody's, the previous positive outlook on local and foreign currency ratings reflected Moody's opinion that Unibank is strongly positioned in its rating category, indicating a high probability of migration to the next higher rating category, subject to further strengthening of its key rating drivers, namely franchise and financial fundamentals.

Moody's decision to change the outlook to negative reflects Unibank's weakening liquidity position and increased refinancing risk faced by the bank. The negative outlook also reflects Moody's concerns about Unibank's ability to refinance its debt obligations without having significant reduction in its business activity.

"Moody's notes that the rapid growth of Unibank's assets in recent years has been mainly funded by international borrowings which increased from US$33 million in 2006 to around US$223 million in 2008," says Lev Dorf, a Moscow-based Moody's Associate Analyst and lead analyst for Unibank.

Moody's expects Unibank to repay its forthcoming debt obligations partly through the liquidity support to be obtained from the National Bank of Azerbaijan which has already agreed to provide a loan for the amount equivalent to US$62 million to Unibank.

Moody's comments that the outlook on Unibank's ratings could return to stable if the bank successfully refinances a substantial portion of foreign borrowings that are due for repayment, thus improving its funding and liquidity profiles.

On 21 November, official exchange rate totalled 0.8099 AZN/USD.

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