S&P lowers some debt of three Russia banks

Standard & Poor’s said it lowered the ratings on rated, non-deferrable subordinated debts issued prior to 2014 by VTB Bank JSC, Gazprombank and JSC Alfa-Bank.

The agency said it changed the previous base-case assumption that legacy non-deferrable debts issued prior to the introduction of amendments to Regulation 395-P in Russia could not absorb losses without a default of senior debt.

S&P said it now believes that such instruments are likely to be cancelled or absorb losses as part of the financial rehabilitation process under Russia’s federal bankruptcy laws.

The downgraded debt includes the rating on VTB Bank’s $1.5 billion 6.95% loan participation notes ser 21 due Oct. 17, 2022 to B- from BB- and its $20 billion medium-term notes program to B- from BB-.

The rating on Gazprombank’s $500 million 7¼% ser 4 subordinated notes due May 3, 2019 was downgraded to B- from BB-, along with the rating on its $15 billion medium-term notes program to B- from BB-.

The ratings on Alfa-Bank’s $300 million loan participation notes due February 22, 2017 were downgraded to B from B+, along with its $750 million loan participation notes due Sept. 26, 2019 to B from B+.

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