Moody’s rates Busan Bank notes Baa2

Moody's Investors Service said it assigned a provisional Baa2 rating to the amended subordinated notes component of Busan Bank's (A2 negative, baa1) existing $2 billion global medium-term note program.

The agency also assigned a Baa2 (hyb) rating to the bank's proposed dollar-denominated Basel III-compliant PONV subordinated bond issue.

The ratings are positioned one notch below the bank's baa1 adjusted baseline credit assessment (adjusted BCA).

In the agency’s view, losses on the securities can only be imposed at the point of non-viability and therefore the same notching – as for vanilla subordinated debt – is appropriate.

Although Busan Bank's issuance is technically contractual loss-absorption non-viability subordinated debt, Moody's said its rating approach is consistent with how it rates plain vanilla subordinated debt without a contractual loss feature that is subject to a statutory bail-in regime in terms of the timing for the imposition of losses.

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