- 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 Belarusbank will continue to service all its financial obligations, including its foreign-currency-denominated debt to residents.
- 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 Belarusbank'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 Belarusbank 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, Belarusbank remains current on its foreign-currency (FX)- and local-currency-denominated 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 consider that if sanctions and capital controls tighten, Belarusbank may face difficulties in servicing its current obligations, similar to those faced by the government of Belarus. 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 understand the bank has not experienced any difficulties in servicing its financial obligations. Belarusbank has several FX-denominated domestic issues outstanding totaling about $780 million. Its bondholders are all Belarusian residents. Moreover, the bank is not exposed to sovereign FX-denominated debt. It also has 15 local-currency-denominated bonds outstanding totaling BYN2 billion (about $790 million), most of which mature in 2030.
In April 2022, the bank's sole shareholder Belarus injected BYN1.8 billion ($700 million) of capital, which is about one-third of its total capital. We note that Belarusbank'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 180% and net stable funding ratio indicators above 110% as of July 1, 2022. Belarusbank's liquid assets--including unrestricted cash, interbank placements, and the securities portfolio--accounted for about BYN4.3 billion, or 23% of total assets at the same date.
The negative outlook indicates that macroeconomic and fiscal stress may weaken Belarusbank's ability to stay current on its obligations.
We would lower the ratings on Belarusbank 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 Belarusbank 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
- 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, 2022
- Belarusbank 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|
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
|Additional Contact:||Financial Institutions EMEA;|
No content (including ratings, credit-related analyses and data, valuations, model, software, or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced, or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor’s Financial Services LLC or its affiliates (collectively, S&P). The Content shall not be used for any unlawful or unauthorized purposes. S&P and any third-party providers, as well as their directors, officers, shareholders, employees, or agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness, or availability of the Content. S&P Parties are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, for the results obtained from the use of the Content, or for the security or maintenance of any data input by the user. The Content is provided on an “as is” basis. S&P PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWARE ERRORS OR DEFECTS, THAT THE CONTENT’S FUNCTIONING WILL BE UNINTERRUPTED, OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION. In no event shall S&P Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs or losses caused by negligence) in connection with any use of the Content even if advised of the possibility of such damages.
Credit-related and other analyses, including ratings, and statements in the Content are statements of opinion as of the date they are expressed and not statements of fact. S&P’s opinions, analyses, and rating acknowledgment decisions (described below) are not recommendations to purchase, hold, or sell any securities or to make any investment decisions, and do not address the suitability of any security. S&P assumes no obligation to update the Content following publication in any form or format. The Content should not be relied on and is not a substitute for the skill, judgment, and experience of the user, its management, employees, advisors, and/or clients when making investment and other business decisions. S&P does not act as a fiduciary or an investment advisor except where registered as such. While S&P has obtained information from sources it believes to be reliable, S&P does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives. Rating-related publications may be published for a variety of reasons that are not necessarily dependent on action by rating committees, including, but not limited to, the publication of a periodic update on a credit rating and related analyses.
To the extent that regulatory authorities allow a rating agency to acknowledge in one jurisdiction a rating issued in another jurisdiction for certain regulatory purposes, S&P reserves the right to assign, withdraw, or suspend such acknowledgement at any time and in its sole discretion. S&P Parties disclaim any duty whatsoever arising out of the assignment, withdrawal, or suspension of an acknowledgment as well as any liability for any damage alleged to have been suffered on account thereof.
S&P keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their respective activities. As a result, certain business units of S&P may have information that is not available to other S&P business units. S&P has established policies and procedures to maintain the confidentiality of certain nonpublic information received in connection with each analytical process.
S&P may receive compensation for its ratings and certain analyses, normally from issuers or underwriters of securities or from obligors. S&P reserves the right to disseminate its opinions and analyses. S&P's public ratings and analyses are made available on its Web sites, www.spglobal.com/ratings (free of charge), and www.ratingsdirect.com (subscription), and may be distributed through other means, including via S&P publications and third-party redistributors. Additional information about our ratings fees is available at www.spglobal.com/usratingsfees.