S&P lowers Ibercaja Banco debt

Standard & Poor's said it lowered the issue ratings to C from B+ on the preferred stock issued by Ibercaja Banco SA and to D from BB+ on its non-deferrable subordinated debt.

The ratings on these instruments also were removed from CreditWatch with negative implications, where they were placed March 2012, S&P said.

The downgrades follow news that Ibercaja has offered to repurchase, among other securities, its outstanding preferred stock and non-deferrable subordinated debt with a nominal value outstanding of €558.8 million.

The offer constitutes a distressed exchange under S&P's criteria, the agency said. This is because investors will receive less value than the promise of the original securities, S&P said, as the offer will likely imply a repurchase below par value. Additionally, the agency said it thinks the offer is not purely opportunistic.

S&P also considered the fact that Ibercaja needs to improve its solvency to cover the capital shortfall identified in the stress test exercise recently undertaken by Oliver Wyman.

The long-term rating on Ibercaja also is at the bottom end of the investment-grade category and on CreditWatch negative, implying a possible downgrade of up to two notches, the agency added.

These factors heighten investors' perception that payments on hybrid instruments and non-deferrable subordinated debt are increasingly uncertain, S&P said.

The downgrades do not affect the counterparty credit ratings on Ibercaja or any other issue ratings, the agency said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.