Fitch: Industrial Bank of Korea notes BB+

Fitch Ratings said it assigned the proposed dollar-denominated perpetual subordinated notes of South Korea's Industrial Bank of Korea (IBK; AA-/stable) an expected rating of BB+ (EXP).

While the size of the issue has yet to be determined, the notes have a call option after five years and each interest payment date thereafter. The notes will be issued under the bank’s $8 billion global medium-term note program, which was last updated on June 30.

IBK will use the proceeds for its general corporate purposes.

The agency expects the notes to qualify as Basel III Additional Tier-1 (AT1) securities for regulatory capital purposes.

Fitch said it rates the Basel III AT1 notes four notches below IBK's viability rating of a- by applying two notches for loss severity relative to the recovery prospects of senior unsecured debt and another two notches for the high incremental non-performance risk relative to the anchor rating.

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