OREANDA-NEWS. April 20, 2009. Fitch Ratings has downgraded Alliance DPR Company SA's 2006-B and 2007-A notes, while maintaining them on Rating Watch Negative (RWN), and affirmed the 2006-A note with a Stable Outlook. The rating actions are as follows, reported the press-centre of KASE:

Series 2006-A USD95m notes affirmed at 'AAA'; Outlook Stable Series 2006-B USD67.9m notes downgraded to 'B-' (B minus) from 'BB'; remain on RWN Series 2007-A USD75m notes downgraded to 'B-' (B minus) from 'BB'; remain on RWN.

The transaction is a securitisation of present and future diversified payment rights originated by Alliance Bank JSC, a private commercial bank headquartered in Almaty, Kazakhstan.

Fitch's decision to downgrade the 2006-B and 2007-A notes follows both a fundamental change in the collection flows for the diversified payment rights transaction and growing concerns surrounding Alliance Bank JSC's financial position.

As of February 2009, reported non-Kazakhstan collections dropped to USD1.6m from USD36.1m in January, while reported Kazakhstan collections jumped to USD154.8m from USD43.9m. Fitch is concerned by the sharp fall in non-Kazakh flows and by the fact that the Kazakhstan-based flows now constitute the bulk of collections. Fitch believes the change in composition, coupled with the capital control legislation currently being considered in Kazakhstan, significantly increases the sovereign interference risk that this transaction is exposed to, with both the volatility and the composition of the flows now a major concern for the agency. Fitch is also concerned about the timely and accurate reporting of the transaction's flows.

Fitch has additional concerns as to the long-term ability of the bank to meet its debt obligations, following the announcement by Alliance Bank JSC on 1 April 2009 that it is planning a write-down as a result of an overstatement of its assets, which could have serious implications for its securities portfolio.

Fitch downgraded Alliance Bank JSC's Long-term foreign currency Issuer Default Rating (IDR) to 'RD' from 'CCC'/Rating Watch Negative (RWN) on 14 April 2009 as a result of the increased likelihood of restructuring of the bank's debt. The rating of Alliance DPR's notes reflects the agency's view that the future flow transaction secured by the DPR collateral has a lower likelihood of default than the bank's unsecured debt. Fitch also downgraded Alliance DPR Company's long-term IDR to 'B-' (B minus), and placed it on Rating Watch Negative.

Fitch's decision to affirm the 2006-A note with a Stable Outlook is based on the guarantee and reimbursement agreement provided by the Asian Development Bank (ADB) ('AAA'/Stable), guaranteeing the full payment of interest and principal on the note. Fitch notes that, under an accelerated amortisation event, the ADB could opt to continue paying both interest and principal under the scheduled amortisation which, while not affecting the ultimate payment of principal for the 2006-A note, could result in an interest payment shortfall. However, Fitch believes that the ADB will maintain its commitment to honour the guarantee in full and on time, regardless of the actual repayment schedule. Fitch believes that this is the most likely scenario due to the ADB's historical role in supporting development finance and the institution's reputation as a supranational guarantee provider.