Credit rating rationale. Alfa Bond Issuance Plc, an Irish SPV, has placed an LPN issue and provided proceeds from the issue in full as a subordinated loan to JSC “ALFA-BANK” (hereinafter — Alfa-Bank, or the Bank). In our opinion, the terms of the issue comply with the requirements of the Bank of Russia Regulation No. 646-P for its inclusion into additional Tier-2 capital sources.

The issue is a subordinated debt of the Bank with respect to senior unsecured creditors. The terms of the issue provide for a complete write-off of the loan and a refusal to pay interest on the eurobond without giving rise to the right of the creditors to claim unpaid interest should any of the below events occur: 1) N1.1 ratio stays below 2% for six or more business days within 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 three notches below the final credit rating of the Bank at AA(RU).

The credit rating of Alfa-Bank is based on its strong business profile, adequate capital reserves, adequate liquidity and funding position, and satisfactory risk profile. The rating is further supported by the Bank’s moderate systemic importance for the Russian financial market.

Key issue properties

Borrower

JSC “ALFA-BANK”

Borrower’s credit rating

AА(RU), outlook Stable

Actual issuer

Alfa Bond Issuance Plc

Type of security

Subordinated eurobonds (LPN)

Issue volume

USD 400 mln

ISIN

XS2063279959

Final placement date

October 15, 2019

Call option date

April 15, 2025

Maturity date

April 15, 2030

Regulatory disclosure

The credit rating has been assigned to XS2063279959 eurobonds 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 the Key Concepts Used by the Analytical Credit Rating Agency within the Scope of Its Rating Activities.

The credit rating has been assigned to XS2063279959 eurobonds issued by JSC “ALFA-BANK” (actual issuer: Alfa Bond Issuance Plc) for the first time. The credit rating is expected to be revised within one year following the publication date of this press release.

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

No material discrepancies between the provided data and data officially disclosed by JSC “ALFA-BANK” 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 credit rating assignment.

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