(The following statement was released by the rating agency)
SINGAPORE, August 30 (Fitch) Fitch Ratings has assigned
Overseas Bank Limited’s (UOB) proposed US dollar-denominated
Tier 2 subordinated notes an expected rating of ‘A+(EXP)’.
The notes will be issued under the bank’s SGD15bn Euro
programme. The final rating on the securities is subjected to
the receipt of
final documentation conforming to information already received.
KEY RATING DRIVERS
The Basel III-compliant Tier 2 securities are rated one notch
below UOB’s ‘aa-‘
Viability Rating (VR). This reflects their higher loss-severity
risk relative to
senior unsecured instruments, which is due to their subordinated
presence of a non-viability clause and the partial, rather than
write-down feature at the point of non-viability.
The Monetary Authority of Singapore has sole discretion in
determining if UOB is
non-viable. If it does so, the notes may be written down in full
or in part to
the extent necessary to restore the bank’s viability. A
write-down of the Tier 2
notes will occur only after any Additional Tier 1 securities
loss-absorption features are fully written off, after which the
Tier 2 notes
would be written down pro rata with other parity Tier 2
loss-absorption features. The write-down would be permanent.
No additional notching has been ascribed to non-performance
risk, as Fitch…