S&P rates Arab Banking floaters BBB

Standard & Poor's said it assigned its BBB long-term debt rating to step-up subordinated floating-rate notes due 2017 to be issued by Bahrain's Arab Banking Corp. B.S.C. (BBB+/stable/A-2).

The FRNs, the size of which is still to be determined, are to be issued under Arab Banking's $2.5 billion euro MTN program, recently revised to allow for issuance of subordinated debt, the agency said, adding that the rating on the FRN is lower than that on the company's senior unsecured debt rating because the debt issue is subordinated.

The issue's proceeds will be used to fund growth in assets, reduce maturity mismatches and enhance regulatory capital adequacy ratios, S&P said, adding that the ratings on Arab Banking reflect its strong wholesale customer franchise, robust capitalization, enhanced risk management and a cohesive strategy backed by substantial capital resources, somewhat offset by the lack of a strong home market, a reliance on short-term funding and challenges associated with implementing the strategy.

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