Fitch advices to speed up IBA's recapitalisation

Fitch Ratings says that further delays with the recapitalisation of International Bank of Azerbaijan (IBA) continue to weigh on the bank's ratings and increase the risk of a further downgrade, the agency said on Monday.

"IBA's Long-term Issuer Default Rating (IDR) of 'BB+' is currently on Rating Watch Negative, reflecting this downside potential," the statement said.

IBA's management has informed Fitch that the bank's recapitalisation plan will be approved and implemented during the next few weeks.

"Fitch understands that as before, the plan foresees that new capital will be contributed primarily in the form of subordinated debt, although an equity injection also remains a possibility and may result in a temporary increase in the government's stake in the bank," the statement said.

Fitch's base case expectation remains that IBA will ultimately receive sufficient support from the Azerbaijan authorities to meet its payment obligations, and the bank's IDRs continue to reflect this expectation. If the authorities complete the planned recapitalisation of the bank, then IBA's ratings could be affirmed. However, continued delays with implementation of these plans, in particular if they result in debt acceleration, could result in further rating downgrades.

IBA's current ratings are as follows:

Long-term foreign currency IDR: 'BB+' RWN
Short-term foreign currency IDR: 'B' RWN
Viability Rating: 'cc' RWN
Support Rating: '3' RWN
Support Rating Floor: 'BB+' RWN


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