Fitch Ratings said on Monday that it has placed Raiffeisenbank Bulgaria’s issuer default ratings (IDR) on watch negative over uncertainty on whether its parent can support it in the context of the coronavirus disease (COVID-19) pandemic. “The RWN on RBBG reflects increased uncertainty that the ability of its parent, Raiffeisen Bank International (RBI), to support the Bulgarian subsidiary may weaken. This reflects the pressures on the parent group’s credit profile arising from the economic effects of the coronavirus outbreak,” Fitch Ratings said in a statement. Raiffeisenbank Bulgaria’s viability rating is unaffected by the current rating action, Fitch Ratings added. The ratings agency also said:”KEY RATING DRIVERSRBBG’s IDR and Support Rating (SR) reflect our view of a high probability that RBI would support its subsidiary in case of need. This reflects the strategic importance of Bulgaria and the wider central and Eastern Europe (CEE) region to the parent, strong synergies underpinned by a record in supporting the parent’s objectives and a high level of management and operational integration. In our view, reputational risk to RBI would be high if its Bulgarian subsidiary were to default. We believe any required support to RBBG would be immaterial to the parent’s ability to provide it. Factors that could, individually or collectively, lead to positive rating action/upgrade: Improvement in the parent’s ability to support the bank. Given our expectation that the risks on the parent’s credit profile are skewed to the downside, currently the upgrade of the RBBG’s IDR is unlikely. Factors that could, individually or collectively, lead to negative rating action/downgrade: Our view that the parent’s ability to support the bank has weakened.-RBBG’s SR is sensitive to changes in Fitch’s view of the parent’s ability and propensity to support the bank. In our view the latter is unlikely to change in the foreseeable future.”
