Fitch rates Development Bank of the Philippines hybrids BB-

Fitch Ratings said it assigned a BB- rating to the Development Bank of the Philippines' planned hybrid issue of up to $130 million. The bank was also assigned a BB+ long-term local-currency issuer default rating, a BB long-term foreign-currency issuer default rating and an AA+(phl) national rating.

The bank's C/D individual rating and 3 support rating were affirmed, and the outlook is stable.

The agency said the ratings reflect Development Bank of the Philippines' strong inherent financial strength (albeit within a weak and potentially volatile Philippine operating environment) and the considerable likelihood of support for the bank if needed by its 100% shareholder, the Philippine government.

The hybrids' rating considers the greater potential for investor loss on such instruments due to the bank's ability to defer interest payments if its CAR falls below the 10% regulatory minimum or if its distributable reserves - from which the interest is to be paid - becomes insufficient, Fitch said. It also takes into account the hybrids' junior status in the event of liquidation.

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