Fitch: DBS Bank notes AA-(emr)

Fitch Ratings said it assigned a rating of AA-(emr) to DBS Bank Ltd.'s $20 million 15-year callable range accrual notes due Sept. 20, 2031.

The (emr) suffix indicates that the rating only reflects the counterparty credit risk of the bank, the agency said, and excludes the embedded market risk that may vary the size of the coupon payments on the notes.

The notes are fully principal-protected in that only the coupon stream on the notes is subject to market risk, Fitch said.

Coupon payments are linked to the U.S. dollar three-month Libor and the spread between the 30-year and five-year U.S. dollar-swap rates, the agency said.

The instruments may not pay any coupon for a particular interest period if the referenced interest rates move unfavorably, Fitch said. The total interest payout on the notes is capped at 3.63% a year, the agency said.

While the tenor on the notes is 15 years, the bank has the option to redeem all outstanding notes at par on any interest payment date, Fitch said.

The notes are rated at the same level as the bank’s AA- long-term issuer default rating as they constitute direct, unsecured and unsubordinated obligations of DBS and rank equally with all its other unsecured, unsubordinated obligations, the agency said.

The bank also has a short-term issuer default rating of F1+ and viability rating of AA-, Fitch said.

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