Monday 17, July 2017 by Georgina Enzer

Moody's assigns (P)B2(hyb) subordinated debt rating to Odea Bank A.S.

Moody's Investors Service has today assigned a provisional (P)B2(hyb) long-term foreign-currency subordinated debt rating to Odea Bank A.S.'s (Odeabank -- long term foreign-currency deposit rating of Ba3 with a negative outlook, short term foreign-currency deposit rating of NP and BCA of ba3) planned US dollar-denominated contractual non-viability Tier 2 bond issuance.

RATINGS RATIONALE

The provisional rating assigned to the subordinated debt obligations of Odeabank is positioned two notches below the bank's adjusted baseline credit assessment (BCA) of ba3, in line with Moody's standard notching guidance for subordinated debt with loss triggered at the point of non-viability, on a contractual basis. The provisional rating does not incorporate any uplift from government support.

The planned subordinated debt issuance is expected to be Basel III-compliant and eligible for Tier 2 capital treatment under Turkish law. The positioning of Odeabank's provisional rating two notches below the bank's adjusted BCA reflects the potential for greater uncertainty associated with the timing of a principal write-down when compared to any "plain vanilla" subordinated debt. In this respect, Moody's highlights that - as a way for the bank to avoid a bank-wide resolution - the notes may be forced to absorb losses ahead of "plain vanilla" subordinated debt, if any.

Moody's issues provisional ratings in advance of the final sale of the securities. The ratings, however, only represent Moody's preliminary credit opinion. Upon conclusive review of all transaction and associated documents, Moody's will endeavour to assign definitive ratings to the notes. A definitive rating may differ from a provisional rating if the terms and conditions of the issuance are materially different from those of the preliminary prospectus reviewed.

WHAT COULD CHANGE THE RATING UP/DOWN

The assigned rating is notched from the adjusted BCA of Odeabank and further movements will be contingent on the changes in this reference point.

PRINCIPAL METHODOLOGY

The principal methodology used in this rating was Banks published in January 2016. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

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