S&P lowers PrivatBank

Standard & Poor's said it lowered the long-term counterparty credit rating on PrivatBank to SD (selective default) from CC, along with its short-term rating to SD from C.

The downgrades follow PrivatBank's signing of a supplemental loan agreement regarding its $200 million bonds due September 2015, S&P said.

As part of the agreement, PrivatBank changed the interest rate to 10¼% from 9 3/8% on the bonds and extended the maturity date to Jan. 15, 2016, from Sept. 23, 2015.

The agreed extension of the 2015 bonds is viewed by S&P as a distressed exchange, which is tantamount to a selective default, the agency said.

This is based on an understanding that the investors would not receive the full value of the bonds on time as originally agreed, S&P said.

PrivatBank's stand-alone credit profile is unchanged at CCC, reflecting the bank's adequate business position, weak capital and earnings, adequate risk position and weak funding and liquidity profile, the agency said.

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