Moody’s rates Intesa Sanpaolo program Ba3

Moody's Investors Service said it assigned a provisional Ba3 rating to the $25 billion global medium-term note program established by Intesa Sanpaolo SpA (Baa1/Baa1 stable, baa3) to issue additional tier 1 capital instruments and a provisional Ba3(hyb) rating to the expected issue of additional tier 1 non-viability contingent capital instruments under the program.

The provisional Ba3/provisional Ba3(hyb) rating assigned to the program and notes is based on Intesa Sanpaolo's standalone creditworthiness and is positioned three notches below the bank's baa3 adjusted baseline credit assessment, one notch below to reflect high loss severity under the agency’s advanced loss given failure (LGF) analysis and a further two notches below to reflect the higher payment risk associated with the non-cumulative coupon skip mechanism, as well as the probability of the bank-wide failure.

The LGF analysis takes into consideration the principal write-down feature, in combination with the tier 1 notes' deeply subordinated claim in liquidation, Moody’s said.

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