Expected credit rating rationale. The planned issue represents a perpetual subordinated obligation of JSC “ALFA-BANK” (hereinafter, the Bank). The terms of the issue comply with the requirements of the Bank of Russia Regulation No. 646-P for its inclusion into additional Tier-1 capital sources. The above loan will be included into capital of the Bank after receipt of the respective approval from the Bank of Russia.

The issue envisages a significant level of subordination with respect to senior unsecured creditors as well as the right of the Bank to unilaterally cancel at its own discretion any interest payment on this issue, with lenders obtaining no right to claim the unpaid interest. The terms of the issue provide for a complete write-off of the loan should any of the below events occur: 1) N1.1 ratio remains below 5.125% for six or more business days during a continuous period of 30 business days; 2) the Board of Directors of the Bank of Russia approves a plan for the latter’s participation in the implementation of bankruptcy prevention measures with respect to the Bank, or the Committee on Banking Supervision of the Bank of Russia approves a plan for the Deposit Insurance Agency’s participation in the implementation of bankruptcy prevention measures with respect to the Bank. According to ACRA’s methodology, the final credit rating of this issue type has to be five notches below the standalone creditworthiness (SCA) assessment of the Bank (a+).

The credit rating of JSC “ALFA-BANK” is based on the Bank’s strong business profile, adequate capital cushion, adequate liquidity and funding positions, and a satisfactory risk profile. The moderate systemic importance of JSC “ALFA-BANK” in the Russian financial market provides the rating with additional support.

Key issue properties

Issuer

JSC “ALFA-BANK”

Issuer’s credit rating

AA(RU), outlook Stable

Actual issuer

JSC “ALFA-BANK”

Type of security

Perpetual subordinated certified unregistered coupon bond

Issue volume

RUB 5 bln

RegS

40101326B001P

Estimated start date of bookbuilding

June 18, 2019

Maturity date

-

Regulatory disclosure

ACRA will assign the credit rating to С01-01 perpetual bond issued by JSC “ALFA-BANK” after receipt of final documentation. If the final documentation differs significantly from the preliminary materials received, ACRA may change the rating of the issue relative to the level of the expected credit rating.

The expected credit rating to С01-01 perpetual bond issued by JSC “ALFA-BANK” has been assigned under the national scale for the Russian Federation and is based on the Methodology for Assigning Credit Ratings to Individual Issues of Financial Instruments Under the National Scale of the Russian Federation and Key Concepts Used by the Analytical Credit Rating Agency Within the Scope of Its Rating Activities.

The expected credit rating to С01-01 perpetual bond issued by JSC “ALFA-BANK” has been assigned for the first time. ACRA will assign a final credit rating within 90 days following the publication date of this press release.

The assigned expected credit rating is based on the data provided by JSC “ALFA-BANK”, information from publicly available sources, and ACRA’s own databases. The expected credit rating is solicited, and JSC “ALFA-BANK” participated in its assignment.

No material discrepancies between the provided information and the data officially disclosed by the rated entity in its financial statements have been discovered.

ACRA provided additional services to JSC “ALFA-BANK”. No conflicts of interest were discovered in the course of the expected credit rating assignment.

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