S&P gives DBS preferreds A

Standard & Poor's said it assigned its A rating to the proposed issue of S$1.5 billion noncumulative nonconvertible nonvoting guaranteed perpetual preference shares to be issued by DBS Capital Funding II Corp.

DBS Capital is wholly owned by DBS Bank Ltd. (AA-/stable/A-1+) and is an exempted company with limited liability, incorporated under the Cayman Islands law, the agency said.

The proceeds will be used to purchase subordinate notes issued by DBS Bank, S&P noted, adding that the rating on the preference shares is linked to the counterparty credit ratings on DBS Bank, as all payment obligations of DBS Capital in respect of the preference shares are guaranteed on a subordinated basis by DBS Bank.

The rating on the preference shares is, however, two notches lower than DBS Bank's counterparty rating due to the guarantee's subordinated position to DBS Bank's other debt obligations and the dividend deferral feature of preference shares, the agency said.

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