April 19, 2006 | Cbonds
Fitch Ratings has today assigned B.I.N. Capital S.A’s forthcoming USD100m issue of limited recourse three-year loan participation notes an expected ‘RR4’ Recovery Rating and expected Long-term 'B-' (B minus)rating.
The notes are to be used solely for financing a loan to Russia’s Joint-Stock Bank “B.I.N.” (“BIN”, rated Issuer Default ‘B-’ (B minus)/Stable Outlook, Short-term ‘B’, Individual ‘D’, Support ‘5’, National Long-term ‘BB(rus)’). B.I.N. Capital S.A will only pay noteholders amounts received from BIN under the loan agreement. The final rating is contingent upon receipt of final documentation conforming materially to information already received.
The loan agreement states that the claims of the noteholders will rank at least the same with the claims of other unsecured creditors, save those preferred by relevant (e.g. bankruptcy, liquidation, etc.) laws. Under Russian law, the claims of retail depositors rank above those of unsecured creditors. At end-2005, retail deposits accounted for some 43% of BIN’s non-equity funding, according to the bank’s International Financial Reporting Standards accounts. However, in Fitch’s view, there would still be average recovery prospects for noteholders, as reflected in the ‘RR4’ rating.
Covenants under the loan agreement stipulate a minimum Tier 1 capital adequacy ratio of 10% and a minimum total capital adequacy ratio of 12%, as calculated in accordance with BIS guidelines. They also limit restructurings, mergers and disposals by BIN.
Covenants also specify that the terms of all transactions with affiliated entities must be no less favourable for BIN than those of transactions with non-related parties. In addition, a written opinion from an independent appraiser is required for transactions with affiliated entities equal to more than USD10 million.
The loan agreement contains a negative pledge clause in relation to the creation of liens, although it allows for a degree of securitization by BIN. In the event of such securitization, Fitch notes that the nature and extent of any over-collateralisation would be assessed by the agency for any potential impact on unsecured creditors.
BIN was established in 1993 and is majority-owned by one family (including the bank’s president), which also controls the BIN group of companies. BIN’s business remains focused on large corporates, notably in the oil and commercial real estate sectors, although the bank has also been diversifying into small- and medium-sized enterprise and retail banking. At end-2005 BIN’s tier 1 and total capital adequacy ratios in accordance with BIS guidelines were 23.5%.
Emission: BINBank, 9.5% 18may2009, USD
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