Moody’s: Promsvyazbank debt Ba2 (hyb), under review

Moody's Investors Service said it assigned a B2 (hyb) rating to Promsvyazbank's non-viability subordinated debt issued in the form of $333 million, 10˝% loan participation notes (maturing in 2021) that are subject to contractual loss absorption upon the breach of a predefined trigger and/or the start of the bank's planned financial rehabilitation.

At the same time, the agency placed the rating on review for downgrade, reflecting the status of Promsvyazbank's long-term ratings, which were placed on review for downgrade on Dec. 23.

The notes are Basel-III-compliant debt instruments, which qualify as regulatory tier 2 capital. The notes were issued by PSB Finance SA on a limited recourse basis for the sole purpose of financing a subordinated loan to Promsvyazbank.

In line with Moody's "global banks" rating methodology, the assigned B2 (hyb) rating is positioned two notches below Promsvyazbank's ba3 adjusted baseline credit assessment. This approach is in line with the agency’s notching guidance for subordinated debt, with loss triggered at the point of non-viability, i.e., in the event that the bank is subject to financial rehabilitation and/or upon the breach of capital triggers set at, or close to the point of non-viability, both on a contractual basis.

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