YEREVAN, July 14, /ARKA/. Fitch Ratings said it has assigned Dilijan Finance B.V.'s upcoming issue of senior unsecured notes an expected Long-term rating of 'B+(EXP)' and a Recovery Rating of 'RR4'. These limited recourse notes are to be used solely for financing a US dollar-denominated loan to Ardshinbank CJSC (Ardshin).

Fitch ratings said ina press release that Ardshin has a Long-term Issuer Default Rating (IDR) of 'B+' with Negative Outlook, a Short-term IDR of 'B', a Viability Rating of 'b+', a Support Rating of '5' and a Support Rating Floor of 'No Floor'. The total amount and final maturity of the issue are yet to be determined.

The final rating is contingent upon the receipt of final documents conforming to information already received.

The issue's rating corresponds to Ardshin's 'B+' Long-term IDR, which considers the high dollarisation of the bank's balance sheet, large loan concentrations, rapid recent growth in a fairly high-risk environment and moderate loss absorption capacity relative to regulatory capital requirements.

The rating also reflects the bank's notable domestic franchise, reasonable financial metrics, solid IFRS/Basel capital ratios and an adequate liquidity buffer in light of upcoming wholesale debt maturities.

The Negative Outlook on the bank's Long-term IDR is driven by a weak operating environment in Armenia, and reflects Fitch's view that this is likely to negatively impact the bank's profitability metrics, capitalisation and asset quality.

The issue's Recovery Rating of 'RR4' reflects average recovery prospects for bondholders in case of default.

Changes to Ardshin's Long-term IDR would impact the issue's rating. Downside pressure on Ardshin's ratings could arise if the weak operating environment translates into a marked deterioration in the bank's asset quality, performance and capital metrics. A major liquidity shortfall could also cause a downgrade.

Stabilisation of the country's economic prospects, and maintaining the bank's currently sound asset quality and profitability metrics would reduce downward pressure on the ratings. -0-