Fitch assigns Sovcombank notes B

Fitch Ratings said it assigned SovCom Capital DAC’s upcoming offering of dollar-denominated perpetual additional tier 1 notes an expected long-term rating of B. SovCom Capital DAC, registered in Ireland, is a financing special purpose entity of PJSC Sovcombank.

The proceeds will be used solely for financing a perpetual subordinated loan to Sovcombank, which will count it as regulatory tier 1 capital at the bank.

The issue size is not yet defined. The notes will have no established redemption date. However, Sovcombank will have an option to repay the notes every five years starting from 2025 subject to the Central Bank of Russia’s approval.

The notes will be rated four notches below Sovcombank’s bb+ viability rating. According to Fitch’s criteria, this is the highest possible rating that can be assigned to deeply subordinated notes with fully discretionary coupon omission issued by banks with a VR anchor of bb+, the agency said.

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