Fitch is rating Privatbank mortgage eurbonds

From Ukrainian News

Fitch Ratings, an international credit-rating agency, has assigned the BBB-and B+ ratings to the Eurobonds issued for USD 171 million by Privatbank, one of the largest banks in Ukraine.

Fitch announced this in a statement, a text of which Ukrainian News has obtained. The Eurobonds consist of Class A notes with a volume of USD 134.1 million, which were assigned a BBB- rating, and Class B notes with a volume of USD 36.9 million, which were assigned a B+ rating. The transaction is a securitization of first-lien US dollar-denominated, Ukrainian residential mortgage loans together with their ancillary rights. The ratings address timely payment of Class A interest, ultimate payment of Class B interest and ultimate payment of principal at the final legal maturity of the notes in accordance with the terms of the notes.

The ratings do not address payment of step-up interest on the notes. Moreover, the ratings are based on the quality of the collateral, available credit enhancement, the underwriting, and servicing capabilities of the originator and the legal structure of the transaction. Credit ratings in the B group indicate that significant credit risk is present, but a limited margin of safety remains.

As Ukrainian News earlier reported, Moody's, an international rating agency, earlier assigned its Ваа3 rating to the USD-171-million Eurobonds. Privatbank floated USD 171 million worth of Eurobonds on February 13. The Class A notes were issued for USD 134.1 million for an average of 3.5 years at an annual yield rate equal to one-month LIBOR + 2.1%. The Class B notes were issued for USD 36.9 million for an average of 7.17 years at an annual yield rate equal to one-month LIBOR + 3.75%.

Privatbank sold five-year Eurobonds for USD 500 million at 8% annual interest in January. Privatbank's net assets increased were valued at UAH 33,777.2 million, its loan portfolio at UAH 28,767.5 million, and its equity at UAH 3,288.3 million as of January 1, 2007.