Fitch rates International Industrial Bank notes B

Fitch Ratings said it has assigned IIB Luxembourg SA's forthcoming issue of limited recourse loan-participation notes an expected long-term B rating.

The notes are to be used solely for financing a loan to Russia's International Industrial Bank CJSC (long-term B/stable, short-term B, individual D, support 5).

The loan agreement states that the claims of the noteholders will rank at least pari passu with the claims of other unsecured creditors, save those preferred by relevant laws. Under Russian law, the claims of retail depositors rank above those of unsecured creditors; however, at end-2004, retail deposits accounted for less than 4% of International Industrial Bank's total liabilities, according to the bank's International Financial Reporting Standards accounts, Fitch said.

The loan agreement contains a negative pledge clause, which allows for a degree of securitization by IIB. In the event of such a securitization, Fitch said the nature and extent of any over-collateralization would be assessed by the agency for any potential impact on unsecured creditors.

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