OREANDA-NEWS. Fitch Ratings has assigned JSC BGEO Group's (BGEO) upcoming issue of senior unsecured notes an expected Long-Term rating of 'BB-(EXP)'. BGEO is Bank of Georgia's (BoG; BB-/Stable/bb-) direct holding company (holdco), domiciled in Georgia.

BGEO has a Long-Term Issuer Default Rating (IDR) of 'BB-' with a Stable Outlook, Short-Term IDR of 'B', Viability Rating of 'bb-', Support Rating of '5' and Support Rating Floor of 'No Floor' (see 'Fitch Rates BGEO Group 'BB-'; Outlook Stable' dated 16 June 2016 at www. fitchratings. com).

The final rating is contingent upon the receipt of final documents conforming to information already received.

KEY RATING DRIVERS

The issue's rating corresponds to BGEO's 'BB-' Long-Term IDR, which is at the same level as that of its main operating subsidiary, BoG, reflecting Fitch's view that the default risk of the holdco is highly correlated with that of BoG. This view is based on BGEO's expected reliance on loan repayments and dividends from BoG as the main source of cash flows to service the holdco's debt. BGEO's ratings also take into account the current absence of any double leverage at the holdco level and Fitch's expectation that any future double leverage will be moderate.

The expected total issuance amount is USD300m and the final maturity is yet to be determined. The issue will not be guaranteed by BoG, but at least USD200m will be on-lent to the bank on similar terms to those of the bond, and up to USD100m will be used for general corporate purposes, including investments in existing subsidiaries and for funding acquisitions. Fitch does not expect double leverage to increase above 120% after BGEO places the upcoming senior unsecured notes.

RATING SENSITIVITIES

Changes to BGEO's Long-Term IDR would impact the issue's rating. BGEO's ratings are sensitive to changes in BoG's ratings. In addition, downside risks could arise if future BGEO debt issuance results in a marked increase in double leverage or if this results in significantly increased liquidity risks at the BGEO level.

Greater risks relating to BGEO's non-banking subsidiaries - because of a marked increase in their size, deterioration in their credit profiles or greater reliance on their cash flows for servicing of holdco debt - could also be negative for BGEO's ratings.