BAKU, Azerbaijan, Nov. 20
By Fakhri Vakilov - Trend:
Fitch Ratings has assigned Uzbekistan’s Industrial and Construction Bank Joint-Stock Commercial Bank (UICB) planned senior unsecured Eurobond issue an expected long-term rating of 'BB-(EXP)', Trend reports citing Fitch.
“Assigning final ratings to the issue is contingent upon receipt by Fitch of the final documentation conforming to the information already received from the issuer,” Fitch reported.
UICB's first US dollar-denominated Eurobonds are expected to be fixed rate bonds, with a maturity of five years. The proceeds are to be used for general corporate purposes.
The planned issue is expected to be rated in line with UICB's 'BB-' long-term issuer default rating (IDR), which is driven by state support. The IDR is equalized with that of the sovereign and reflects majority state ownership, the low cost of potential support relative to the sovereign's international reserves, the bank's policy role and a track record of capital and liquidity support provided to the bank in the last few years.
“A planned partial transfer of directed loans to the Uzbekistan Fund for Reconstruction and Development may somewhat weaken the bank's policy role, but this should not have a material impact on the propensity of the state to support the bank,” Fitch stated.
UICB remains a large systemically important bank with strategic state ownership and continues to receive capital and funding support from the government.
The expected rating is sensitive to changes in UICB's long-rerm IDR, which, in turn, will reflect any change in probability of state support for the bank.
“Should privatisation plans for UICB change, resulting in minority state ownership or a much-diminished role for the bank, reducing its systemic importance, we will likely review our assessment of support probability,” Fitch stated.
Similar to other Uzbek state-owned banks, UICB has Environmental, Social, and Governance (ESG) Relevance Score of '4' for Governance Structure as Uzbekistan’s state is highly involved in the bank at board level and in the business.
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