Moody's Investors Service has upgraded the senior unsecured foreign currency bonds of Turkiye Vakiflar Bankasi (VakifBank) to Ba2 from B1. The upgrade is a result of a change in Moody's long-standing approach to rating the foreign currency bonds of debt issuers that now permits ratings of bonds and notes of some issuers to exceed their country ceilings for long-term debt.
According to Moody's, the upgrade incorporates the importance of VakifBank in the Turkish banking system, the high likelihood of Turkish government support for the bank in the event of need, the low-to-moderate probability of a foreign currency payment moratorium by Turkey and the correspondingly low likelihood that these debt obligations would be caught up in any payment moratorium.
The "D" Financial Strength Rating (FSR) of VakifBank remains on review for a possible downgrade, says Moody's. The rating agency points out that the FSR is the fundamental, stand-alone, perspective of the credit strength of an institution. It does not impute support for a bank by the government authorities in the event of need.
The review for downgrade stems from Moody's prior expectations - later confirmed - that asset quality had deteriorated substantially during 2001 relative to VakifBank's equity base. Moody's is assessing the fundamental credit strength of the institution, and expects to conclude the review for downgrade in the near future. Turkiye Vakiflar Bankasi, headquartered in Ankara, Turkey reported assets of $7.65 billion as of 31 December 2001. — (menareport.com)
© 2002 Mena Report (www.menareport.com)
