| Moody's continues rating review of Bank Nadra (Ukraine) |
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10/11/2009 15:46 (120 Day 23:36 minutes ago) | |||||
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The FINANCIAL -- Moody's Investors Service said on November 10 that it is continuing its rating review of Bank Nadra (Nadra).
On 12 February 2009, Moody's downgraded the bank's deposit ratings to Caa2 and National Scale Rating (NSR) to B3.ua and placed them on review for possible further downgrade. Nadra's bank financial strength rating (BFSR) was downgraded to E with a stable outlook. These actions were prompted by Nadra being placed into temporary administration by the National Bank of Ukraine (NBU) following a run on deposits at the bank that could not be contained by liquidity support provided by the NBU to the bank at the time.
Separately, on 26 June 2009, Moody's downgraded Nadra's long-term foreign currency senior unsecured debt rating to C from Caa2, with a stable outlook, based on its expectation that the bank's senior unsecured creditors will incur significant losses consistent with a C rating category, according to the terms of the restructuring recently proposed by the bank to the bondholders.
The bank's bondholders and the majority of its wholesale creditors have so far not accepted the original restructuring proposal by the bank and the debt restructuring negotiations are continuing.
Moody's review for a possible downgrade of the bank's deposit ratings continues to capture the present uncertainty with regard to the future of Nadra, as the NBU and the Ukrainian government are currently considering solutions concerning the bank's future. These solutions include a possible recapitalisation of the bank by the government in the event that
If the bank successfully restructures its liabilities to foreign creditors and is recapitalised by the Ukrainian government, Moody's would be likely to upgrade Nadra's deposit ratings to reflect improvements in the bank's liquidity profile and capitalisation. However, if the decision is made to liquidate the bank, its ratings would be likely to be downgraded, possibly by several notches, given that, in the event of a liquidation, the expected recovery rate to the bank's depositors would likely be below that implied by a Caa2 rating.
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