Fitch rates Chinatrust Commercial bonds A-, AA(twn)

Fitch Ratings said it assigned an expected long-term foreign-currency rating of A- and an expected national long-term rating of AA(twn) to Chinatrust Commercial Bank's expected NT$700 million perpetual cumulative subordinated bonds and expected NT$4.6 billion dated subordinated bonds. The bank's expected $4.6 billion subordinated bonds are to be issued through several tranches corresponding to the different due dates. The proposed bond size is subject to market demand. The final ratings are contingent upon receipt of final documents.

The perpetual cumulative bonds, classified as upper tier 2 capital, have no maturity date and are subject to a modest 100bp step-up if the bonds are not redeemed in 2015. The bonds carry an interest deferral option that will be triggered if the bank's capital adequacy ratio falls below a required minimum, currently at 8%, or if its cumulative losses exceed its retained earnings and the capital reserve.

The ratings are a notch below the bank's current long-term foreign-currency issuer default rating of A and national long-term rating of AA+(twn).

The bank's long-term foreign-currency issuer default rating has a stable outlook and is supported by its strong market position in its retail and wholesale businesses, good management quality and revitalized performances in profitability and asset quality following an industry-wide unsecured consumer credit crisis in 2005-2006, Fitch said.

The bank has a negligible amount of investments in SIVs and U.S. mortgage-backed structured credit instruments and these pose no notable implications for its financial strength, the agency said.

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