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Ratings of Azerbaijan’s top bank reviewed

16 May 2017 [16:00] - TODAY.AZ

By Azernews


By Sara Israfilbayova

The International Bank of Azerbaijan (IBA), within the next stage of the recovery process, has started voluntary restructuring of liabilities to foreign creditors, as a result of which international rating agencies Fitch and Moody's revised the rating of the IBA.

Fitch assigned the Bank a CCC rating, and Moody's rating was revised to Caa3.

IBA Board Chairman Khalid Ahadov, commenting on the decision of international rating agencies, noted that this is consistent with international practice.

"This is a normal practice and a decision that is quite expected for us. Similar cases occur in the practice of other financial structures that have passed through a similar process. In accordance with the methodology of rating agencies, the ratings of financial structures that are in the process of restructuring liabilities are reduced for a short period of time. Upon completion of the process aimed at improving the financial performance of the institution, the ratings are re-established. The downgrade of the IBA ratings is also temporary, " the Chairman said.

In July 2015, President Ilham Aliyev signed a decree on the measures for rehabilitation related to the preparations for privatizing the state-owned shares of the International Bank of Azerbaijan JSC.

The shortcomings in the management, investment and loan policy of the IBA, as well as financing of less efficient, risky investment projects worsened the Bank's financial state, caused increase in the share of distressed assets and reduced its liquidity.

The restructuring plan contemplates a restructuring process to be effected through an exchange of IBA’s senior and junior foreign currency obligations for direct sovereign obligations of the Republic of Azerbaijan. Pending the implementation of the planned restructuring process, and to ensure equal treatment of all affected creditors, IBA has suspended payments of principal and interest with respect to all obligations to be included in the operation (other than interest under trade finance facilities).

The process will lead to a meeting of all creditors affected by the restructuring plan. If approved by two-thirds of the affected creditors by value the plan will be accepted and become binding on all of them. 

The IBA has been operating since 1992 and is one of the country's two state banks.

URL: http://www.today.az/news/business/161267.html

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