- On Aug. 3, 2022, S&P Global Ratings lowered its long-term foreign currency rating on Belarus to 'SD' (selective default), following the government's inability to fulfill one of its coupon payments.
- We expect Belagroprombank will continue to service its debt.
- Therefore, we removed from CreditWatch negative our foreign currency long-term rating on the bank and affirmed it at 'CC', in line with the transfer and convertibility (T&C) assessment on Belarus. At the same time, we removed from CreditWatch negative our foreign currency short-term rating on the bank and affirmed it at 'C'.
- We also affirmed our local-currency ratings at 'CCC/C', since we consider Belarusian-ruble (BYN)-denominated bank debt to be less vulnerable to nonpayment.
- The negative outlook indicates that macroeconomic and fiscal stress may weaken Belagroprombank's ability to stay current on its obligations.
On Aug. 5, 2022, S&P Global Ratings removed its foreign currency long-term and short-term issuer credit ratings on Belagroprombank from CreditWatch with negative implications, where it was placed on March 1, 2022. At the same time, we affirmed our 'CC/C' foreign currency and 'CCC/C' local currency long- and short-term ratings on the bank. The outlook on both the local currency and foreign currency long-term ratings is negative.
Despite our downgrade of Belarus to 'SD' and risks of further tightening of capital controls, Belagroprombank remains current on its financial obligations. We lowered the foreign currency rating on Belarus to 'SD' because the Belarusian government did not make the coupon payment of some $23 million on its U.S.-dollar-denominated 2027 Eurobond in dollars by the end of the contractual grace period. We believe macroeconomic and fiscal stress may weaken Belagroprombank's ability to stay current on its local-currency financial obligations. We consider Belagroprombank's financial performance to be closely tied to that of the sovereign because it has relied on government support 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.
We understand the bank has not experienced any difficulties in servicing its financial obligations thus far. The bank has 15 outstanding local-currency-denominated bonds totaling BYN1.7 billion (about $670 million), most of which mature after 2025. Belagroprombank does not have any foreign-currency-denominated debt.
In April 2022, the bank's sole shareholder Belarus increased its capital by BYN640 million ($250 million), which is about one-third of its total capital. We note that Belagroprombank's deposit base has been relatively stable since the beginning of 2022. The bank maintains funding and liquidity ratios well above minimum requirements, with liquidity coverage ratio indicators above 250% and net stable funding ratio indicators above 120% as of July 1, 2022. Belagroprombank's liquid assets--including unrestricted cash, interbank placements, and the securities portfolio--accounted for about BYN3.9 billion, or 24% of total assets at the same date.
The negative outlook indicates that macroeconomic and fiscal stress may weaken Belagroprombank's ability to stay current on its obligations.
We would lower the ratings on Belagroprombank if we see indications that the bank's obligations could suffer nonpayment or restructuring, or if we observe significant deposit outflows.
Any positive rating action on Belagroprombank would require a positive rating action on the sovereign, including an improvement of our T&C assessment.
ESG credit indicators: E-2, S-1, G-4
- General Criteria: Hybrid Capital: Methodology And Assumptions, March 2, 2022
- Criteria | Financial Institutions | Banks: Banking Industry Country Risk Assessment Methodology And Assumptions, Dec. 9, 2021
- Criteria | Financial Institutions | General: Financial Institutions Rating Methodology, Dec. 9, 2021
- General Criteria: Environmental, Social, And Governance Principles In Credit Ratings, Oct. 10, 2021
- General Criteria: Group Rating Methodology, July 1, 2019
- Criteria | Financial Institutions | General: Risk-Adjusted Capital Framework Methodology, July 20, 2017
- General Criteria: Methodology For Linking Long-Term And Short-Term Ratings, April 7, 2017
- General Criteria: Rating Government-Related Entities: Methodology And Assumptions, March 25, 2015
- General Criteria: Ratings Above The Sovereign--Corporate And Government Ratings: Methodology And Assumptions, Nov. 20, 2013
- General Criteria: Criteria For Assigning 'CCC+', 'CCC', 'CCC-', And 'CC' Ratings, Oct. 1, 2012
- General Criteria: Principles Of Credit Ratings, Feb. 16, 2011
- Belarus Foreign Currency Ratings Lowered To 'SD/SD' On Ruble Payment Of Coupon On Dollar-Denominated Eurobond, Aug. 3, 2022Belagroprombank Foreign-Currency Long-Term Rating Lowered To 'CC' And Kept On CreditWatch Negative, May 13, 2022
- Belarusbank And Belagroprombank Ratings On Watch Negative On Increased Risks Related To Russia-Ukraine Escalation, March 1, 2022
|Issuer Credit Rating|
|Ratings Affirmed; CreditWatch/Outlook Action|
|Issuer Credit Rating|
|Foreign Currency||CC/Negative/C||CC/Watch Neg/C|
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