Moody’s rates Oversea-Chinese notes A2 (hyb)

Moody's Investors Service said it assigned its A2 (hyb) subordinated foreign-currency debt rating to the notes to be issued by Oversea-Chinese Banking Corp. Ltd. (deposits Aa1 under review for downgrade, bank financial strength rating B under review for downgrade).

The proposed subordinated notes will be issued under OCBC's existing $10 billion medium-term note program.

The proposed subordinated notes are expected to be of benchmark size, denominated in U.S. dollars and mature in 10 years without a call option.

The notes are subordinated obligations with full or partial write-off feature at the point of non-viability, as defined by the Monetary Authority of Singapore. The notes are on review for downgrade, in line with the review for downgrade on OCBC's long-term ratings.

Moody’s said the debt rating assigned to OCBC's subordinated notes is positioned two notches below the bank's aa3 adjusted baseline credit assessment, in line with Moody's standard notching guidance for subordinated debt with loss triggered at the point of non-viability on a contractual basis.

The additional notch relative to "plain vanilla" subordinated debt with normal loss severity, reflects the potential uncertainty associated with the timing of loss absorption, given that the Monetary Authority of Singapore has not defined the point at which it would deem the bank to be non-viable, the agency said.

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