Fitch downgrades Belarus’ Development Bank to “near default” 

May 7, BPN. Fitch Ratings downgraded the Belarusian Development Bank to “C” (near default).

It linked the move to the bank’s announcement deferring coupon payments on its US dollar-denominated Eurobond due in May and November until May 2024.

“If the payment on the May 2023 coupon is not made to investors within the 14-day grace period, we will consider this a restricted default,” Fitch said.

Belarusian Development Bank is a state-controlled bank specializing in investment projects and financing small and medium-sized businesses.

On April 14, Fitch affirmed Belarus’ Long-Term-Foreign-Currency Issuer Default Rating (IDR) at “RD” (restricted default).

In late June 2022, the Belarusian government and the National Bank declared their intentions to service Belarus’ foreign debt in Belarusian rubels. The finance ministry reported the next day the first rubel payment of interest on the 2027 Eurobond denominated in US dollars.

In early July, Citibank, N.A. of London announced that it will stop servicing payments on Belarus’ Eurobonds amid Western sanctions.

Shortly after, rating agencies Fitch and Moody’s downgraded Belarus’ credit rating: the former said its default was inevitable, and the latter described the rubel payment as a default.

The Belarusian Ministry of Finance criticized those decisions and continues to pay debts in Belarusian currency.

Fitch, along with Standard & Poor’s (S&P) and Moody’s, is one of the so-called “Big Three” international rating agencies.