S&P applies BB to ICBC securities

Standard & Poor's said it assigned its BB long-term issue rating to a proposed issue of noncumulative offshore preference shares by Industrial and Commercial Bank of China Ltd. (ICBC, A/stable/A-1; cnAA+/cnA-1).

The agency also assigned its cnBBB Greater China regional scale rating to the shares.

The issuance is part of ICBC's plan to raise up to RMB 80 billion in preference shares, onshore and offshore.

S&P said the rating reflects its new hybrid capital criteria, which are applicable to issues rated after Sept. 18. It considers issue-level risks determined in part by ICBC's regulatory environment, including provisions related to the implementation of the Basel III framework. The agency notes that the Basel III-compliant instrument qualifies as regulatory additional Tier-1 capital.

The rating is four notches lower than ICBC's stand-alone credit profile of bbb+. S&P said it made a one-notch downward adjustment for subordination, a two-notch downward adjustment for the risk of coupon nonpayment for a Tier-1 instrument and a one-notch downward adjustment for the issue's common equity conversion feature.

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