Fitch: ING convertibles BB

Fitch Ratings said it assigned an expected rating of BB to ING Group’s planned issue of additional tier 1 convertible notes.

The final rating is contingent upon final documents conforming to the information already received.

The notes will be CRD IV-compliant perpetual non-cumulative additional tier 1 instruments.

The notes are subject to automatic conversion if ING Group’s consolidated common equity tier 1 (CET1) ratio falls below 7%, Fitch said, and any coupon payments may be cancelled at the discretion of the bank.

The expected rating is five notches below ING Group’s implicit intrinsic creditworthiness, the agency said.

This reflects somewhat higher risk in ING Group as a holding company compared with its main operating company, ING Bank, the agency added.

The notching also reflects the higher expected loss severity for the notes when compared with average recoveries, as well as high risk of non-performance, Fitch said.

The notching also considers the deep subordination of the notes, the full contractual automatic conversion language and that the instruments can be converted before the point of non-viability, the agency said.

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