YEREVAN, March 16. /ARKA/. Moody’s Investors Service has affirmed Armenian Ardshinbank’s local currency deposit rating of B1, foreign-currency senior unsecured debt rating of B1, its baseline credit assessments (BCAs) and adjusted BCA of b1 and changed the outlook to positive from stable on the local-currency deposit rating of B1 and foreign-currency senior unsecured debt rating of B1.
Ardshinbank’s foreign currency deposit rating of B2 has been affirmed with a stable outlook as the rating remains constrained by the foreign currency deposit ceiling.
Concurrently, Moody’s has affirmed Ardshinbank’s short-term deposit ratings of Not Prime, its long-term Counterparty Risk Assessments (CR Assessments) of Ba3(cr) and the short-term CR Assessment of Not Prime(cr). A full list of affected ratings can be found at the end of this press release.
The rating action follows Moody’s change of outlook on Armenia’s B1 sovereign debt rating to positive from stable on March 9, 2018. The agency’s Macro Profile for Armenia remains “Weak” following the affirmation of the B1 sovereign rating.
The change in the outlook on Armenia’s B1 government bond rating to positive from stable led to corresponding changes in the outlooks of Ardshinbank’s local currency deposit rating of B1 and foreign currency senior unsecured debt rating of B1 which benefit from potential support from the Armenian government.
Ardshinbank’s long-term global local currency (GLC) deposit rating of B1 is based on the bank’s BCA of b1 and Moody’s assessment of high probability of government support in the event of need, given its large market shares. However, this support currently does not provide any rating uplift to Ardshinbank’s rating as Armenia’s B1 sovereign rating is at the same level as the bank’s BCA. Ardshinbank was the third-largest bank in Armenia with a 14.8% market share in total banking loans and 13.4% in deposits as of end 2017.
Given that Ardshinbank’s long term ratings are at the Armenia’s sovereign rating level or constrained by the country ceiling, any positive rating action on Ardshinbank’s ratings would be driven by a higher sovereign rating or/and country ceiling.
The rating outlooks could be changed to stable if the outlook on Armenia’s sovereign debt rating were to be revised to stable or if Armenian government’s capacity or propensity to render support to Ardshinbank were to diminish (which is not currently anticipated). -0-
