OREANDA-NEWS. Fitch Ratings has assigned Alfa Bond Issuance plc's (ABI) USD500m 5% fixed rate senior limited recourse loan participation notes issue, due 27 November 2018, a final 'BB+' rating.

ABI, an Irish SPV issuer of the notes, on-lent the proceeds to Russian JSC Alfa-Bank (Alfa; Long-term local and foreign currency Issuer Default Ratings (IDR) 'BB+'/Negative, Short-term IDR 'B', Viability Rating 'bb+', Support Rating '4', Support Rating Floor 'B' and National Long-term rating 'AA+(rus)'/Stable).

There are no financial covenants in the facility agreement except compliance with regulatory capital requirements. The terms of the issue include an event of default clause in case the parent company ABH Financial Limited (ABHFL, BB/Negative) or its successor (in case of potential reorganisation) ceases to control more than 50% of Alfa. The loan/notes are not guaranteed by ABHFL.

KEY RATING DRIVERS
The rating of the issue is driven by Alfa's Long-term Issuer Default Rating (IDR) of 'BB+'.

RATING SENSITIVITIES
The rating of the issue is likely to move in tandem with Alfa's Long-term IDR. The Negative Outlook on Alfa's Long-Term IDRs mirrors that on the Russian sovereign rating and reflects the potential for the bank's ratings to be downgraded due to pressure on financial metrics from the now recessionary environment. At the same time, Alfa remains the highest-rated Russian privately-owned bank, reflecting its good management and track record of navigating through past Russian crises, and its currently strong balance sheet and solid financial metrics.