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Fitch cuts Bank of Azerbaijan to CCC
Fitch Ratings said it downgraded International Bank of Azerbaijan's long-term foreign-currency issuer default rating to CCC from BB and placed it on Rating Watch Evolving (RWE).
Fitch said the downgrade was driven by the bank's May 11 announcement of measures to stabilize its financial position. The bank will carry out a debt restructuring through an exchange of its senior and junior foreign currency non-deposit obligations for direct sovereign debt of Azerbaijan (BB+/negative).
International Bank of Azerbaijan has suspended servicing of these obligations prior to the submission of a debt restructuring proposal on May 23, 2017.
The downgrade reflects Fitch's view that default is a real possibility, either because: (a) The restructuring of senior obligations will constitute a distressed-debt exchange (DDE) under the agency’s criteria; or (b) there will be a significant extension of the moratorium on servicing obligations prior to the restructuring being completed. Fitch said it would view the restructuring as a DDE if, in the agency's view, it imposes a material reduction in terms for senior creditors.
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