Fitch rates OMV notes BBB

Fitch Ratings said it assigned an expected rating of BBB to OMV AG’s proposed subordinated fixed-to-reset rate euro-denominated notes.

The securities qualify for 50% equity credit.

The expected rating for the proposed hybrid capital securities reflects the highly subordinated nature of the notes, which are considered to have lower recovery prospects in a liquidation or bankruptcy scenario than senior debt, Fitch said.

The equity credit reflects the structural equity-like characteristics of the instruments including subordination, maturity in excess of five years and deferrable interest coupon payments, the agency said.

The proposed notes have been notched down by two notches from OMV’s long-term issuer default rating given their deep subordination and consequently, the lower recovery prospects in a liquidation or bankruptcy scenario relative to the senior obligations of the issuer, Fitch said.

The bonds rank pari passu with OMV’s fixed-to-floating €750 million notes issued in 2011, also rated BBB with 50% equity credit, the agency said.

These are key equity-like characteristics, affording OMV greater financial flexibility, Fitch said.

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