S&P downgrades International Industrial Bank
MOSCOW. July 8 (Interfax) - Standard & Poor's Ratings Services has lowered its long- and short-term counterparty credit ratings on Russia-based International Industrial Bank (IIB) to 'D/D' (default) from 'CC/C'.
S&P downgraded IIB to 'D' because it was unable to pay its EUR200 million 9.0% senior unsecured loan participation notes that matured on July 6, 2010. IIB also issued a default notice on its US$200 million 11.0% loan participation notes due 2013.
IIB lends to commercial and industrial projects run by United Industrial Corporation (not rated), which is affiliated with Sergey Pugachyov, a businessman and member of the Federation Council of Russia, the upper chamber of the parliament of the Russian Federation. Pugachyov and his family own 81% of IIB. The bank's senior managers own the rest.
IIB was already unable to repay its borrowings from the Central Bank of Russia (CBR) in June. The CBR has extended the maturity of its uncollateralized loans to IIB until January 2011. Unsecured loans from CBR totaled more than one-third of IIB's liabilities on June 1, 2010. IIB reportedly is in talks with the CBR regarding the sale or pledge of some of Mr. Pugachyov's nonbanking assets in a potential workout agreement that may include other creditors. We believe that at present IIB's access to additional liquidity is insufficient to meet its general obligations.