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Research: Financials
On 27 June, Moody’s upgraded Alpha Bank’s long-term senior-unsecured debt rating by two notches to Baa3 (Ba2 previously), its long- and short-term deposit ratings by one notch to Baa3/P-3 (Ba1/NP previously) and its long- and short-term counterparty credit risk (CCR) rating by one notch to Baa2/P-2 (Baa3/P-3 previously). The move takes Moody’s key ratings on Alpha to investment grade for the first time in 14 years. This is a further positive development for Alpha as it continues to execute its strategy and demonstrate recurring profitability and capital generation. S&P, Fitch and Capital Intelligence currently assign BB- (sub-investment grade) long-term debt ratings to Alpha Bank.
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Alpha Bank |
Moody’s raise to investment grade
Financials |
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1 July 2024 |
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Alpha Bank is a research client of Edison Investment Research Limited |
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On 27 June, Moody’s upgraded Alpha Bank’s long-term senior-unsecured debt rating by two notches to Baa3 (Ba2 previously), its long- and short-term deposit ratings by one notch to Baa3/P-3 (Ba1/NP previously) and its long- and short-term counterparty credit risk (CCR) rating by one notch to Baa2/P-2 (Baa3/P-3 previously). The move takes Moody’s key ratings on Alpha to investment grade for the first time in 14 years. This is a further positive development for Alpha as it continues to execute its strategy and demonstrate recurring profitability and capital generation. S&P, Fitch and Capital Intelligence currently assign BB- (sub-investment grade) long-term debt ratings to Alpha Bank.
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Consensus estimates
Source: LSEG. Note: *EPS is basic statutory at 27 June 2024. |
In addition to the long-term senior-unsecured, deposit and CCR upgrades, Moody’s has also upgraded Alpha’s subordinated debt by two notches to Ba2 (B1 previously) and its standalone baseline credit assessment by one notch to Ba2 (Ba3 previously).
Moody’s highlighted the improvement in non-performing exposures and related strong collateral backing, cost efficiency and sustainable earnings power at Alpha as it executes its business plan. The fully loaded Common Equity Tier 1 (CET1) ratio of 14.6% at March 2024 would be 16.2% pro forma for the UniCredit transaction, which is expected to close by the end of 2024. Moreover, Alpha projects a CET1 ratio of 17.5% by 2026, which should help to reduce the reliance on deferred tax credits in regulatory capital.
The ratings upgrades should have a positive impact on future funding costs and profitability at Alpha Bank as the pool of potential investors should grow considerably.
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Research: Consumer
musicMagpie’s (MMAG’s) H124 results reflected several strategic decisions taken by the management team to improve profitability and cash generation. The decision to make the US a sourcing-only geography to benefit margins had a notable impact on revenues, with US revenues declining by more than half. Despite the double-digit decline in group revenue, the adjusted EBITDA margin remained relatively stable at 4.4% (H123: 4.5%), reflecting the focus on profitability. The outlook remains challenging, but management is encouraged by the progress made on right-sizing the cost base, the entry into new categories and the historical H2 weighting of the business. MMAG remains in the offer period as numerous discussions with interested parties are ongoing.