Moody’s rates updated OCBC program Baa1

Moody's Investors Service said it assigned a preliminary Baa1 long-term rating to the perpetual capital securities component of the updated global medium-term note program (GMTN) of Oversea-Chinese Banking Corp. Ltd. (OCBC, deposits Aa1 stable, BCA a1).

The agency had previously assigned a provisional Aa1 rating to the senior unsecured component, a provisional A3 rating to the subordinated component and a provisional Prime-1 rating to the short-term component of the global medium-term note program.

The terms and conditions of the capital securities incorporate non-viability language that is compliant with Basel III rules as well as rules set by the Monetary Authority of Singapore (MAS), thereby allowing the securities to be considered as Additional Tier 1 (AT1) capital, under MAS Notice 637.

As part of the March 9 update, OCBC increased the size of the program to $30 billion from $10 billion. The ratings assigned to the program are not affected by the increase in program size.

“The (P)Baa1 rating is positioned three notches below the a1 adjusted baseline credit assessment (BCA) of OCBC, in line with Moody's standard notching guidance for contractual non-viability preferred securities with optional, non-cumulative distribution-skip mechanism,” Moody’s said in a news release.

“The three-notch difference from the adjusted BCA reflects the higher expected loss in these securities and the impairment associated with discretionary coupon suspension.”

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.