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Research Update: Belagroprombank Foreign-Currency Long-Term Ratings Lowered To 'CC' And Kept On CreditWatch Negative

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Research Update: Belagroprombank Foreign-Currency Long-Term Ratings Lowered To 'CC' And Kept On CreditWatch Negative

Overview

  • On May 5, 2022, S&P Global Ratings lowered its long-term foreign currency ratings on Belarus to 'CC', keeping them on CreditWatch with negative implications.
  • Because we generally don't rate banks above the sovereign rating, we lowered our long-term foreign currency rating on Belagroprombank to 'CC' from 'CCC', keeping it on CreditWatch negative.
  • At the same time, we affirmed our local currency ratings at 'CCC/C' and removed them from CreditWatch negative, where we placed them on March 1, 2022. We consider Belarusian ruble-denominated bank debt to be less vulnerable to nonpayment.
  • The negative outlook on the local currency ratings indicates that macroeconomic and fiscal stress may weaken Belagroprombank's ability to stay current on its local currency debt.

Rating Action

On May 13, 2022, S&P Global Ratings lowered its foreign currency long-term issuer credit rating on Belagroprombank JSC to 'CC' from 'CCC'. The rating remains on CreditWatch with negative implications, where it was placed on March 1, 2022. The short-term foreign currency rating is unchanged at 'C'.

At the same time, we affirmed our local currency ratings at 'CCC/C' and removed them from CreditWatch negative, where we placed them on March 1, 2022. We consider the bank's Belarusian ruble-denominated debt is less vulnerable to nonpayment than the foreign-currency-denominated debt. The outlook on the local currency ratings is negative, indicating that macroeconomic and fiscal stress may weaken the bank's ability to stay current on its local currency financial obligations.

Rationale

The rating action on Belagroprombank mirrors that on the sovereign (see "Belarus Foreign Currency Long-Term Ratings Lowered To 'CC' On High Vulnerability To Debt Nonpayment; Kept On Watch Neg," published on May 5, 2022, on RatingsDirect).

We lowered the foreign currency sovereign rating because the Belarus government reported difficulties in meeting its principal and interest payments on debt owed to multilateral lending institutions (MLI) due in April. These disruptions were triggered by international sanctions that denied or significantly diminished the authorities' access to global financial infrastructure.

Generally, we don't rate banks above the sovereign rating because of the likely direct and indirect influence of sovereign distress on their operations, including their ability to service foreign currency obligations. We consider the financial performance of Belagroprombank to be closely tied to that of the sovereign because it has relied on support from the government in the past. We therefore cap our ratings on the bank at the level of the sovereign credit rating on Belarus. Belagroprombank is significantly exposed to economic risks in Belarus and has business, funding, and strategic links to the sovereign.

Outlook

The negative outlook on the local currency ratings reflects that on the local currency sovereign rating amid the high level of macroeconomic and fiscal stress.

Downside scenario

We could lower the local currency ratings on Belagroprombank if we lowered the sovereign local currency ratings or if we saw indications that the bank's obligations denominated in Belarusian rubles could suffer nonpayment or restructuring.

Upside scenario

An upgrade of the local currency ratings on Belagroprombank would depend on a similar rating action on the sovereign.

CreditWatch

The foreign currency ratings remain on CreditWatch negative, in line with those on the sovereign.

ESG credit indicators: E-2, S-1, G-4

Related Criteria

Related Research

Ratings List

Downgraded; Ratings Affirmed
To From

Belagroprombank JSC

Issuer Credit Rating
Foreign Currency CC/Watch Neg/C CCC/Watch Neg/C
Ratings Affirmed; CreditWatch/Outlook Action
To From

Belagroprombank JSC

Issuer Credit Rating
Local Currency CCC/Negative/C CCC/Watch Neg/C

Certain terms used in this report, particularly certain adjectives used to express our view on rating relevant factors, have specific meanings ascribed to them in our criteria, and should therefore be read in conjunction with such criteria. Please see Ratings Criteria at www.standardandpoors.com for further information. A description of each of S&P Global Ratings' rating categories is contained in "S&P Global Ratings Definitions" at https://www.standardandpoors.com/en_US/web/guest/article/-/view/sourceId/504352 Complete ratings information is available to subscribers of RatingsDirect at www.capitaliq.com. All ratings affected by this rating action can be found on S&P Global Ratings' public website at www.standardandpoors.com. Use the Ratings search box located in the left column. Alternatively, call one of the following S&P Global Ratings numbers: Client Support Europe (44) 20-7176-7176; London Press Office (44) 20-7176-3605; Paris (33) 1-4420-6708; Frankfurt (49) 69-33-999-225; or Stockholm (46) 8-440-5914

Analytical Group Contact:Financial Institutions EMEA;
Financial_Institutions_EMEA_Mailbox@spglobal.com

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